Correlation Between Jinsanjiang Silicon and ZJBC Information

Can any of the company-specific risk be diversified away by investing in both Jinsanjiang Silicon and ZJBC Information at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Jinsanjiang Silicon and ZJBC Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jinsanjiang Silicon Material and ZJBC Information Technology, you can compare the effects of market volatilities on Jinsanjiang Silicon and ZJBC Information and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Jinsanjiang Silicon with a short position of ZJBC Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinsanjiang Silicon and ZJBC Information.

Diversification Opportunities for Jinsanjiang Silicon and ZJBC Information

0.39

Correlation Coefficient

Jinsanjiang Silicon  ZJBC Information

Weak diversification

The 3 months correlation between Jinsanjiang and ZJBC is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Jinsanjiang Silicon Material and ZJBC Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZJBC Information Tec and Jinsanjiang Silicon is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Jinsanjiang Silicon Material are associated (or correlated) with ZJBC Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZJBC Information Tec has no effect on the direction of Jinsanjiang Silicon i.e., Jinsanjiang Silicon and ZJBC Information go up and down completely randomly.

Pair Corralation between Jinsanjiang Silicon and ZJBC Information

Assuming the 90 days trading horizon Jinsanjiang Silicon is expected to generate 1.07 times less return on investment than ZJBC Information. In addition to that, Jinsanjiang Silicon is 1.55 times more volatile than ZJBC Information Technology. It trades about 0.06 of its total potential returns per unit of risk. ZJBC Information Technology is currently generating about 0.1 per unit of volatility. If you would invest  202.00  in ZJBC Information Technology on October 23, 2024 and sell it today you would earn a total of  38.00  from holding ZJBC Information Technology or generate 18.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Jinsanjiang Silicon Material  vs.  ZJBC Information Technology

Jinsanjiang Silicon

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jinsanjiang Silicon Material are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jinsanjiang Silicon sustained solid returns over the last few months and may actually be approaching a breakup point.

ZJBC Information Tec

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZJBC Information Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ZJBC Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jinsanjiang Silicon and ZJBC Information

The main advantage of trading using opposite Jinsanjiang Silicon and ZJBC Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jinsanjiang Silicon position performs unexpectedly, ZJBC Information can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ZJBC Information will offset losses from the drop in ZJBC Information's long position.

The idea behind Jinsanjiang Silicon Material and ZJBC Information Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..