Correlation Between Jinsanjiang (Zhaoqing) and Aba Chemicals

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

Diversification Opportunities for Jinsanjiang (Zhaoqing) and Aba Chemicals

0.62

Correlation Coefficient

Jinsanjiang (Zhaoqing)  Aba Chemicals

Poor diversification

The 3 months correlation between Jinsanjiang and Aba is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Jinsanjiang Silicon Material and Aba Chemicals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aba Chemicals Corp 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 Aba Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aba Chemicals Corp has no effect on the direction of Jinsanjiang (Zhaoqing) i.e., Jinsanjiang (Zhaoqing) and Aba Chemicals go up and down completely randomly.

Pair Corralation between Jinsanjiang (Zhaoqing) and Aba Chemicals

Assuming the 90 days trading horizon Jinsanjiang (Zhaoqing) is expected to generate 8.26 times less return on investment than Aba Chemicals. In addition to that, Jinsanjiang (Zhaoqing) is 1.23 times more volatile than Aba Chemicals Corp. It trades about 0.0 of its total potential returns per unit of risk. Aba Chemicals Corp is currently generating about 0.03 per unit of volatility. If you would invest  714.00  in Aba Chemicals Corp on December 26, 2024 and sell it today you would earn a total of  24.00  from holding Aba Chemicals Corp or generate 3.36% return on investment over 90 days.

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

Jinsanjiang Silicon Material  vs.  Aba Chemicals Corp

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.

Aba Chemicals Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aba Chemicals Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Aba Chemicals 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 Aba Chemicals

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

The idea behind Jinsanjiang Silicon Material and Aba Chemicals Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.