Correlation Between Changjiang Jinggong and Marssenger Kitchenware

Can any of the company-specific risk be diversified away by investing in both Changjiang Jinggong and Marssenger Kitchenware 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 Changjiang Jinggong and Marssenger Kitchenware into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Changjiang Jinggong Steel and Marssenger Kitchenware Co, you can compare the effects of market volatilities on Changjiang Jinggong and Marssenger Kitchenware 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 Changjiang Jinggong with a short position of Marssenger Kitchenware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changjiang Jinggong and Marssenger Kitchenware.

Diversification Opportunities for Changjiang Jinggong and Marssenger Kitchenware

0.61

Correlation Coefficient

Changjiang Jinggong  Marssenger Kitchenware

Poor diversification

The 3 months correlation between Changjiang and Marssenger is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Changjiang Jinggong Steel and Marssenger Kitchenware Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marssenger Kitchenware and Changjiang Jinggong 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 Changjiang Jinggong Steel are associated (or correlated) with Marssenger Kitchenware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marssenger Kitchenware has no effect on the direction of Changjiang Jinggong i.e., Changjiang Jinggong and Marssenger Kitchenware go up and down completely randomly.

Pair Corralation between Changjiang Jinggong and Marssenger Kitchenware

Assuming the 90 days trading horizon Changjiang Jinggong Steel is expected to generate 0.46 times more return on investment than Marssenger Kitchenware. However, Changjiang Jinggong Steel is 2.18 times less risky than Marssenger Kitchenware. It trades about 0.12 of its potential returns per unit of risk. Marssenger Kitchenware Co is currently generating about 0.05 per unit of risk. If you would invest  234.00  in Changjiang Jinggong Steel on October 4, 2024 and sell it today you would earn a total of  68.00  from holding Changjiang Jinggong Steel or generate 29.06% return on investment over 90 days.

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

Changjiang Jinggong Steel  vs.  Marssenger Kitchenware Co

Changjiang Jinggong Steel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Marssenger Kitchenware

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marssenger Kitchenware Co 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.

Pair Trading with Changjiang Jinggong and Marssenger Kitchenware

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

The idea behind Changjiang Jinggong Steel and Marssenger Kitchenware 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.