Correlation Between Shanghai Jinfeng and Gem-Year Industrial

Can any of the company-specific risk be diversified away by investing in both Shanghai Jinfeng and Gem-Year Industrial 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 Shanghai Jinfeng and Gem-Year Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shanghai Jinfeng Wine and Gem Year Industrial Co, you can compare the effects of market volatilities on Shanghai Jinfeng and Gem-Year Industrial 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 Shanghai Jinfeng with a short position of Gem-Year Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Jinfeng and Gem-Year Industrial.

Diversification Opportunities for Shanghai Jinfeng and Gem-Year Industrial

0.26

Correlation Coefficient

Shanghai Jinfeng  Gem-Year Industrial

Modest diversification

The 3 months correlation between Shanghai and Gem-Year is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Jinfeng Wine and Gem Year Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gem Year Industrial and Shanghai Jinfeng 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 Shanghai Jinfeng Wine are associated (or correlated) with Gem-Year Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gem Year Industrial has no effect on the direction of Shanghai Jinfeng i.e., Shanghai Jinfeng and Gem-Year Industrial go up and down completely randomly.

Pair Corralation between Shanghai Jinfeng and Gem-Year Industrial

Assuming the 90 days trading horizon Shanghai Jinfeng Wine is expected to under-perform the Gem-Year Industrial. In addition to that, Shanghai Jinfeng is 1.32 times more volatile than Gem Year Industrial Co. It trades about -0.06 of its total potential returns per unit of risk. Gem Year Industrial Co is currently generating about 0.06 per unit of volatility. If you would invest  459.00  in Gem Year Industrial Co on November 30, 2024 and sell it today you would earn a total of  29.00  from holding Gem Year Industrial Co or generate 6.32% return on investment over 90 days.

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

Shanghai Jinfeng Wine  vs.  Gem Year Industrial Co

Shanghai Jinfeng Wine

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shanghai Jinfeng Wine 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.

Gem Year Industrial

Risk-Adjusted Performance

OK

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

Pair Trading with Shanghai Jinfeng and Gem-Year Industrial

The main advantage of trading using opposite Shanghai Jinfeng and Gem-Year Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Jinfeng position performs unexpectedly, Gem-Year Industrial 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 Gem-Year Industrial will offset losses from the drop in Gem-Year Industrial's long position.

The idea behind Shanghai Jinfeng Wine and Gem Year Industrial 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.