Correlation Between Shanghai Jinfeng and Jiangsu Xinri

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Can any of the company-specific risk be diversified away by investing in both Shanghai Jinfeng and Jiangsu Xinri 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 Jiangsu Xinri 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 Jiangsu Xinri E Vehicle, you can compare the effects of market volatilities on Shanghai Jinfeng and Jiangsu Xinri 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 Jiangsu Xinri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Jinfeng and Jiangsu Xinri.

Diversification Opportunities for Shanghai Jinfeng and Jiangsu Xinri

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Shanghai and Jiangsu is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Jinfeng Wine and Jiangsu Xinri E Vehicle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Xinri E 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 Jiangsu Xinri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Xinri E has no effect on the direction of Shanghai Jinfeng i.e., Shanghai Jinfeng and Jiangsu Xinri go up and down completely randomly.

Pair Corralation between Shanghai Jinfeng and Jiangsu Xinri

Assuming the 90 days trading horizon Shanghai Jinfeng Wine is expected to generate 0.94 times more return on investment than Jiangsu Xinri. However, Shanghai Jinfeng Wine is 1.06 times less risky than Jiangsu Xinri. It trades about 0.0 of its potential returns per unit of risk. Jiangsu Xinri E Vehicle is currently generating about -0.01 per unit of risk. If you would invest  575.00  in Shanghai Jinfeng Wine on October 9, 2024 and sell it today you would lose (48.00) from holding Shanghai Jinfeng Wine or give up 8.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Shanghai Jinfeng Wine  vs.  Jiangsu Xinri E Vehicle

 Performance 
       Timeline  
Shanghai Jinfeng Wine 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Jinfeng Wine are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shanghai Jinfeng is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Jiangsu Xinri E 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Jiangsu Xinri E Vehicle 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.

Shanghai Jinfeng and Jiangsu Xinri Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shanghai Jinfeng and Jiangsu Xinri

The main advantage of trading using opposite Shanghai Jinfeng and Jiangsu Xinri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Jinfeng position performs unexpectedly, Jiangsu Xinri 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 Jiangsu Xinri will offset losses from the drop in Jiangsu Xinri's long position.
The idea behind Shanghai Jinfeng Wine and Jiangsu Xinri E Vehicle 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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