Correlation Between Chenming Mold and Ji Haw

Can any of the company-specific risk be diversified away by investing in both Chenming Mold and Ji Haw 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 Chenming Mold and Ji Haw into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chenming Mold Industrial and Ji Haw Industrial Co, you can compare the effects of market volatilities on Chenming Mold and Ji Haw 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 Chenming Mold with a short position of Ji Haw. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chenming Mold and Ji Haw.

Diversification Opportunities for Chenming Mold and Ji Haw

0.05

Correlation Coefficient

Chenming Mold  Ji Haw

Significant diversification

The 3 months correlation between Chenming and 3011 is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Chenming Mold Industrial and Ji Haw Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ji Haw Industrial and Chenming Mold 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 Chenming Mold Industrial are associated (or correlated) with Ji Haw. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ji Haw Industrial has no effect on the direction of Chenming Mold i.e., Chenming Mold and Ji Haw go up and down completely randomly.

Pair Corralation between Chenming Mold and Ji Haw

Assuming the 90 days trading horizon Chenming Mold Industrial is expected to generate 1.41 times more return on investment than Ji Haw. However, Chenming Mold is 1.41 times more volatile than Ji Haw Industrial Co. It trades about 0.13 of its potential returns per unit of risk. Ji Haw Industrial Co is currently generating about -0.02 per unit of risk. If you would invest  11,000  in Chenming Mold Industrial on September 16, 2024 and sell it today you would earn a total of  3,500  from holding Chenming Mold Industrial or generate 31.82% return on investment over 90 days.

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

Chenming Mold Industrial  vs.  Ji Haw Industrial Co

Chenming Mold Industrial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chenming Mold Industrial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chenming Mold showed solid returns over the last few months and may actually be approaching a breakup point.

Ji Haw Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ji Haw Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ji Haw is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chenming Mold and Ji Haw

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

The idea behind Chenming Mold Industrial and Ji Haw Industrial Co 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.