Correlation Between JCET Group and Guangzhou Haige

Can any of the company-specific risk be diversified away by investing in both JCET Group and Guangzhou Haige 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 JCET Group and Guangzhou Haige into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JCET Group Co and Guangzhou Haige Communications, you can compare the effects of market volatilities on JCET Group and Guangzhou Haige 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 JCET Group with a short position of Guangzhou Haige. Check out your portfolio center. Please also check ongoing floating volatility patterns of JCET Group and Guangzhou Haige.

Diversification Opportunities for JCET Group and Guangzhou Haige

0.54

Correlation Coefficient

JCET Group  Guangzhou Haige

Very weak diversification

The 3 months correlation between JCET and Guangzhou is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding JCET Group Co and Guangzhou Haige Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Haige Comm and JCET Group 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 JCET Group Co are associated (or correlated) with Guangzhou Haige. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Haige Comm has no effect on the direction of JCET Group i.e., JCET Group and Guangzhou Haige go up and down completely randomly.

Pair Corralation between JCET Group and Guangzhou Haige

Assuming the 90 days trading horizon JCET Group Co is expected to under-perform the Guangzhou Haige. But the stock apears to be less risky and, when comparing its historical volatility, JCET Group Co is 1.03 times less risky than Guangzhou Haige. The stock trades about -0.14 of its potential returns per unit of risk. The Guangzhou Haige Communications is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  1,207  in Guangzhou Haige Communications on October 7, 2024 and sell it today you would lose (190.00) from holding Guangzhou Haige Communications or give up 15.74% of portfolio value over 90 days.

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

JCET Group Co  vs.  Guangzhou Haige Communications

JCET Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Guangzhou Haige Comm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangzhou Haige Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with JCET Group and Guangzhou Haige

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

The idea behind JCET Group Co and Guangzhou Haige Communications 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.