Correlation Between Changjiang Jinggong and China Publishing

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

Diversification Opportunities for Changjiang Jinggong and China Publishing

0.81

Correlation Coefficient

Changjiang Jinggong  China Publishing

Very poor diversification

The 3 months correlation between Changjiang and China is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Changjiang Jinggong Steel and China Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Publishing Media 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 China Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Publishing Media has no effect on the direction of Changjiang Jinggong i.e., Changjiang Jinggong and China Publishing go up and down completely randomly.

Pair Corralation between Changjiang Jinggong and China Publishing

Assuming the 90 days trading horizon Changjiang Jinggong Steel is expected to generate 0.59 times more return on investment than China Publishing. However, Changjiang Jinggong Steel is 1.7 times less risky than China Publishing. It trades about 0.07 of its potential returns per unit of risk. China Publishing Media is currently generating about -0.07 per unit of risk. If you would invest  311.00  in Changjiang Jinggong Steel on September 20, 2024 and sell it today you would earn a total of  7.00  from holding Changjiang Jinggong Steel or generate 2.25% return on investment over 90 days.

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

Changjiang Jinggong Steel  vs.  China Publishing Media

Changjiang Jinggong Steel

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Changjiang Jinggong Steel are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Changjiang Jinggong sustained solid returns over the last few months and may actually be approaching a breakup point.

China Publishing Media

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Publishing Media are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Publishing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Changjiang Jinggong and China Publishing

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

The idea behind Changjiang Jinggong Steel and China Publishing Media 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.