Correlation Between Jinsanjiang Silicon and Gansu Jiu

Can any of the company-specific risk be diversified away by investing in both Jinsanjiang Silicon and Gansu Jiu 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 Gansu Jiu 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 Gansu Jiu Steel, you can compare the effects of market volatilities on Jinsanjiang Silicon and Gansu Jiu 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 Gansu Jiu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinsanjiang Silicon and Gansu Jiu.

Diversification Opportunities for Jinsanjiang Silicon and Gansu Jiu

0.42

Correlation Coefficient

Jinsanjiang Silicon  Gansu Jiu

Very weak diversification

The 3 months correlation between Jinsanjiang and Gansu is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Jinsanjiang Silicon Material and Gansu Jiu Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gansu Jiu Steel 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 Gansu Jiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gansu Jiu Steel has no effect on the direction of Jinsanjiang Silicon i.e., Jinsanjiang Silicon and Gansu Jiu go up and down completely randomly.

Pair Corralation between Jinsanjiang Silicon and Gansu Jiu

Assuming the 90 days trading horizon Jinsanjiang Silicon Material is expected to under-perform the Gansu Jiu. In addition to that, Jinsanjiang Silicon is 1.17 times more volatile than Gansu Jiu Steel. It trades about -0.06 of its total potential returns per unit of risk. Gansu Jiu Steel is currently generating about -0.07 per unit of volatility. If you would invest  175.00  in Gansu Jiu Steel on October 27, 2024 and sell it today you would lose (28.00) from holding Gansu Jiu Steel or give up 16.0% of portfolio value over 90 days.

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

Jinsanjiang Silicon Material  vs.  Gansu Jiu Steel

Jinsanjiang Silicon

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Gansu Jiu Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gansu Jiu Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Jinsanjiang Silicon and Gansu Jiu

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

The idea behind Jinsanjiang Silicon Material and Gansu Jiu Steel 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.