Correlation Between Jia Jie and Orient Europharma

Can any of the company-specific risk be diversified away by investing in both Jia Jie and Orient Europharma 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 Jia Jie and Orient Europharma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jia Jie Biomedical and Orient Europharma Co, you can compare the effects of market volatilities on Jia Jie and Orient Europharma 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 Jia Jie with a short position of Orient Europharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jia Jie and Orient Europharma.

Diversification Opportunities for Jia Jie and Orient Europharma

0.33

Correlation Coefficient

Jia Jie  Orient Europharma

Weak diversification

The 3 months correlation between Jia and Orient is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Jia Jie Biomedical and Orient Europharma Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Europharma and Jia Jie 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 Jia Jie Biomedical are associated (or correlated) with Orient Europharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Europharma has no effect on the direction of Jia Jie i.e., Jia Jie and Orient Europharma go up and down completely randomly.

Pair Corralation between Jia Jie and Orient Europharma

Assuming the 90 days trading horizon Jia Jie Biomedical is expected to generate 1.75 times more return on investment than Orient Europharma. However, Jia Jie is 1.75 times more volatile than Orient Europharma Co. It trades about 0.06 of its potential returns per unit of risk. Orient Europharma Co is currently generating about 0.06 per unit of risk. If you would invest  1,353  in Jia Jie Biomedical on October 8, 2024 and sell it today you would earn a total of  662.00  from holding Jia Jie Biomedical or generate 48.93% return on investment over 90 days.

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

Jia Jie Biomedical  vs.  Orient Europharma Co

Jia Jie Biomedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jia Jie Biomedical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Orient Europharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orient Europharma Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Orient Europharma 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 Jia Jie and Orient Europharma

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

The idea behind Jia Jie Biomedical and Orient Europharma 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.