Correlation Between Hubei Geoway and Jinsanjiang Silicon

Can any of the company-specific risk be diversified away by investing in both Hubei Geoway and Jinsanjiang Silicon 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 Hubei Geoway and Jinsanjiang Silicon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hubei Geoway Investment and Jinsanjiang Silicon Material, you can compare the effects of market volatilities on Hubei Geoway and Jinsanjiang Silicon 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 Hubei Geoway with a short position of Jinsanjiang Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubei Geoway and Jinsanjiang Silicon.

Diversification Opportunities for Hubei Geoway and Jinsanjiang Silicon

0.47

Correlation Coefficient

Hubei Geoway  Jinsanjiang Silicon

Very weak diversification

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

Pair Corralation between Hubei Geoway and Jinsanjiang Silicon

Assuming the 90 days trading horizon Hubei Geoway is expected to generate 1.79 times less return on investment than Jinsanjiang Silicon. In addition to that, Hubei Geoway is 1.18 times more volatile than Jinsanjiang Silicon Material. It trades about 0.04 of its total potential returns per unit of risk. Jinsanjiang Silicon Material is currently generating about 0.09 per unit of volatility. If you would invest  1,163  in Jinsanjiang Silicon Material on October 4, 2024 and sell it today you would earn a total of  67.00  from holding Jinsanjiang Silicon Material or generate 5.76% return on investment over 90 days.

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

Hubei Geoway Investment  vs.  Jinsanjiang Silicon Material

Hubei Geoway Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hubei Geoway Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hubei Geoway may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Jinsanjiang Silicon

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jinsanjiang Silicon Material are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jinsanjiang Silicon sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hubei Geoway and Jinsanjiang Silicon

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

The idea behind Hubei Geoway Investment and Jinsanjiang Silicon Material 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.