Correlation Between Jiujiang Shanshui and Ningbo Jintian

Can any of the company-specific risk be diversified away by investing in both Jiujiang Shanshui and Ningbo Jintian 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 Jiujiang Shanshui and Ningbo Jintian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiujiang Shanshui Technology and Ningbo Jintian Copper, you can compare the effects of market volatilities on Jiujiang Shanshui and Ningbo Jintian 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 Jiujiang Shanshui with a short position of Ningbo Jintian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiujiang Shanshui and Ningbo Jintian.

Diversification Opportunities for Jiujiang Shanshui and Ningbo Jintian

0.55

Correlation Coefficient

Jiujiang Shanshui  Ningbo Jintian

Very weak diversification

The 3 months correlation between Jiujiang and Ningbo is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Jiujiang Shanshui Technology and Ningbo Jintian Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Jintian Copper and Jiujiang Shanshui 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 Jiujiang Shanshui Technology are associated (or correlated) with Ningbo Jintian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Jintian Copper has no effect on the direction of Jiujiang Shanshui i.e., Jiujiang Shanshui and Ningbo Jintian go up and down completely randomly.

Pair Corralation between Jiujiang Shanshui and Ningbo Jintian

Assuming the 90 days trading horizon Jiujiang Shanshui Technology is expected to under-perform the Ningbo Jintian. In addition to that, Jiujiang Shanshui is 1.19 times more volatile than Ningbo Jintian Copper. It trades about -0.01 of its total potential returns per unit of risk. Ningbo Jintian Copper is currently generating about -0.01 per unit of volatility. If you would invest  698.00  in Ningbo Jintian Copper on October 27, 2024 and sell it today you would lose (90.00) from holding Ningbo Jintian Copper or give up 12.89% of portfolio value over 90 days.

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

Jiujiang Shanshui Technology  vs.  Ningbo Jintian Copper

Jiujiang Shanshui

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ningbo Jintian Copper

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Jintian Copper are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo Jintian may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Jiujiang Shanshui and Ningbo Jintian

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

The idea behind Jiujiang Shanshui Technology and Ningbo Jintian Copper 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.