Correlation Between Chinese Universe and Jiangnan Mould

Can any of the company-specific risk be diversified away by investing in both Chinese Universe and Jiangnan Mould 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 Chinese Universe and Jiangnan Mould into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chinese Universe Publishing and Jiangnan Mould Plastic, you can compare the effects of market volatilities on Chinese Universe and Jiangnan Mould 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 Chinese Universe with a short position of Jiangnan Mould. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chinese Universe and Jiangnan Mould.

Diversification Opportunities for Chinese Universe and Jiangnan Mould

-0.66

Correlation Coefficient

Chinese Universe  Jiangnan Mould

Excellent diversification

The 3 months correlation between Chinese and Jiangnan is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Chinese Universe Publishing and Jiangnan Mould Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangnan Mould Plastic and Chinese Universe 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 Chinese Universe Publishing are associated (or correlated) with Jiangnan Mould. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangnan Mould Plastic has no effect on the direction of Chinese Universe i.e., Chinese Universe and Jiangnan Mould go up and down completely randomly.

Pair Corralation between Chinese Universe and Jiangnan Mould

Assuming the 90 days trading horizon Chinese Universe Publishing is expected to generate 0.63 times more return on investment than Jiangnan Mould. However, Chinese Universe Publishing is 1.58 times less risky than Jiangnan Mould. It trades about 0.03 of its potential returns per unit of risk. Jiangnan Mould Plastic is currently generating about -0.03 per unit of risk. If you would invest  1,256  in Chinese Universe Publishing on October 7, 2024 and sell it today you would earn a total of  16.00  from holding Chinese Universe Publishing or generate 1.27% return on investment over 90 days.

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

Chinese Universe Publishing  vs.  Jiangnan Mould Plastic

Chinese Universe Pub

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chinese Universe Publishing 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.

Jiangnan Mould Plastic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Chinese Universe and Jiangnan Mould

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

The idea behind Chinese Universe Publishing and Jiangnan Mould Plastic 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.