Correlation Between Chinese Universe and Jiangsu Phoenix

Can any of the company-specific risk be diversified away by investing in both Chinese Universe and Jiangsu Phoenix 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 Jiangsu Phoenix 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 Jiangsu Phoenix Publishing, you can compare the effects of market volatilities on Chinese Universe and Jiangsu Phoenix 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 Jiangsu Phoenix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chinese Universe and Jiangsu Phoenix.

Diversification Opportunities for Chinese Universe and Jiangsu Phoenix

0.62

Correlation Coefficient

Chinese Universe  Jiangsu Phoenix

Poor diversification

The 3 months correlation between Chinese and Jiangsu is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Chinese Universe Publishing and Jiangsu Phoenix Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Phoenix Publ 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 Jiangsu Phoenix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Phoenix Publ has no effect on the direction of Chinese Universe i.e., Chinese Universe and Jiangsu Phoenix go up and down completely randomly.

Pair Corralation between Chinese Universe and Jiangsu Phoenix

Assuming the 90 days trading horizon Chinese Universe is expected to generate 4.8 times less return on investment than Jiangsu Phoenix. In addition to that, Chinese Universe is 1.09 times more volatile than Jiangsu Phoenix Publishing. It trades about 0.04 of its total potential returns per unit of risk. Jiangsu Phoenix Publishing is currently generating about 0.19 per unit of volatility. If you would invest  1,047  in Jiangsu Phoenix Publishing on October 1, 2024 and sell it today you would earn a total of  74.00  from holding Jiangsu Phoenix Publishing or generate 7.07% return on investment over 90 days.

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

Chinese Universe Publishing  vs.  Jiangsu Phoenix Publishing

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Jiangsu Phoenix Publ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jiangsu Phoenix Publishing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jiangsu Phoenix 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 Jiangsu Phoenix

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

The idea behind Chinese Universe Publishing and Jiangsu Phoenix Publishing 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.