Correlation Between Zhejiang Juhua and Jinduicheng Molybdenum

Can any of the company-specific risk be diversified away by investing in both Zhejiang Juhua and Jinduicheng Molybdenum 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 Zhejiang Juhua and Jinduicheng Molybdenum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zhejiang Juhua Co and Jinduicheng Molybdenum Co, you can compare the effects of market volatilities on Zhejiang Juhua and Jinduicheng Molybdenum 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 Zhejiang Juhua with a short position of Jinduicheng Molybdenum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Juhua and Jinduicheng Molybdenum.

Diversification Opportunities for Zhejiang Juhua and Jinduicheng Molybdenum

0.47

Correlation Coefficient

Zhejiang Juhua  Jinduicheng Molybdenum

Very weak diversification

The 3 months correlation between Zhejiang and Jinduicheng is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Juhua Co and Jinduicheng Molybdenum Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinduicheng Molybdenum and Zhejiang Juhua 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 Zhejiang Juhua Co are associated (or correlated) with Jinduicheng Molybdenum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinduicheng Molybdenum has no effect on the direction of Zhejiang Juhua i.e., Zhejiang Juhua and Jinduicheng Molybdenum go up and down completely randomly.

Pair Corralation between Zhejiang Juhua and Jinduicheng Molybdenum

Assuming the 90 days trading horizon Zhejiang Juhua is expected to generate 1.78 times less return on investment than Jinduicheng Molybdenum. In addition to that, Zhejiang Juhua is 1.68 times more volatile than Jinduicheng Molybdenum Co. It trades about 0.02 of its total potential returns per unit of risk. Jinduicheng Molybdenum Co is currently generating about 0.07 per unit of volatility. If you would invest  1,031  in Jinduicheng Molybdenum Co on December 27, 2024 and sell it today you would earn a total of  51.00  from holding Jinduicheng Molybdenum Co or generate 4.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

Zhejiang Juhua Co  vs.  Jinduicheng Molybdenum Co

Zhejiang Juhua

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Juhua Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zhejiang Juhua is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jinduicheng Molybdenum

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jinduicheng Molybdenum Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jinduicheng Molybdenum is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zhejiang Juhua and Jinduicheng Molybdenum

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

The idea behind Zhejiang Juhua Co and Jinduicheng Molybdenum 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.