Correlation Between Jinsanjiang (Zhaoqing) and Zhejiang Qianjiang

Can any of the company-specific risk be diversified away by investing in both Jinsanjiang (Zhaoqing) and Zhejiang Qianjiang 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 (Zhaoqing) and Zhejiang Qianjiang 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 Zhejiang Qianjiang Motorcycle, you can compare the effects of market volatilities on Jinsanjiang (Zhaoqing) and Zhejiang Qianjiang 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 (Zhaoqing) with a short position of Zhejiang Qianjiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinsanjiang (Zhaoqing) and Zhejiang Qianjiang.

Diversification Opportunities for Jinsanjiang (Zhaoqing) and Zhejiang Qianjiang

-0.06

Correlation Coefficient

Jinsanjiang (Zhaoqing)  Zhejiang Qianjiang

Good diversification

The 3 months correlation between Jinsanjiang and Zhejiang is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Jinsanjiang Silicon Material and Zhejiang Qianjiang Motorcycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Qianjiang and Jinsanjiang (Zhaoqing) 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 Zhejiang Qianjiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Qianjiang has no effect on the direction of Jinsanjiang (Zhaoqing) i.e., Jinsanjiang (Zhaoqing) and Zhejiang Qianjiang go up and down completely randomly.

Pair Corralation between Jinsanjiang (Zhaoqing) and Zhejiang Qianjiang

Assuming the 90 days trading horizon Jinsanjiang Silicon Material is expected to under-perform the Zhejiang Qianjiang. In addition to that, Jinsanjiang (Zhaoqing) is 1.39 times more volatile than Zhejiang Qianjiang Motorcycle. It trades about -0.02 of its total potential returns per unit of risk. Zhejiang Qianjiang Motorcycle is currently generating about 0.01 per unit of volatility. If you would invest  1,805  in Zhejiang Qianjiang Motorcycle on December 28, 2024 and sell it today you would lose (8.00) from holding Zhejiang Qianjiang Motorcycle or give up 0.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Jinsanjiang Silicon Material  vs.  Zhejiang Qianjiang Motorcycle

Jinsanjiang (Zhaoqing)

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jinsanjiang Silicon Material has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jinsanjiang (Zhaoqing) is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zhejiang Qianjiang

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zhejiang Qianjiang Motorcycle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Zhejiang Qianjiang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jinsanjiang (Zhaoqing) and Zhejiang Qianjiang

The main advantage of trading using opposite Jinsanjiang (Zhaoqing) and Zhejiang Qianjiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jinsanjiang (Zhaoqing) position performs unexpectedly, Zhejiang Qianjiang 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 Zhejiang Qianjiang will offset losses from the drop in Zhejiang Qianjiang's long position.

The idea behind Jinsanjiang Silicon Material and Zhejiang Qianjiang Motorcycle 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.

Check out your portfolio center.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.