Correlation Between Sichuan Chuantou and Jiangsu Xinri

Can any of the company-specific risk be diversified away by investing in both Sichuan Chuantou 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 Sichuan Chuantou and Jiangsu Xinri into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sichuan Chuantou Energy and Jiangsu Xinri E Vehicle, you can compare the effects of market volatilities on Sichuan Chuantou 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 Sichuan Chuantou with a short position of Jiangsu Xinri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Chuantou and Jiangsu Xinri.

Diversification Opportunities for Sichuan Chuantou and Jiangsu Xinri

0.16

Correlation Coefficient

Sichuan Chuantou  Jiangsu Xinri

Average diversification

The 3 months correlation between Sichuan and Jiangsu is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Chuantou Energy 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 Sichuan Chuantou 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 Sichuan Chuantou Energy 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 Sichuan Chuantou i.e., Sichuan Chuantou and Jiangsu Xinri go up and down completely randomly.

Pair Corralation between Sichuan Chuantou and Jiangsu Xinri

Assuming the 90 days trading horizon Sichuan Chuantou Energy is expected to generate 0.51 times more return on investment than Jiangsu Xinri. However, Sichuan Chuantou Energy is 1.96 times less risky than Jiangsu Xinri. It trades about 0.05 of its potential returns per unit of risk. Jiangsu Xinri E Vehicle is currently generating about -0.04 per unit of risk. If you would invest  1,220  in Sichuan Chuantou Energy on October 10, 2024 and sell it today you would earn a total of  393.00  from holding Sichuan Chuantou Energy or generate 32.21% return on investment over 90 days.

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

Sichuan Chuantou Energy  vs.  Jiangsu Xinri E Vehicle

Sichuan Chuantou Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sichuan Chuantou Energy 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.

Jiangsu Xinri E

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Sichuan Chuantou and Jiangsu Xinri

The main advantage of trading using opposite Sichuan Chuantou and Jiangsu Xinri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Chuantou 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 Sichuan Chuantou Energy 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.