Correlation Between Cultural Investment and Jiangxi Naipu

Can any of the company-specific risk be diversified away by investing in both Cultural Investment and Jiangxi Naipu 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 Cultural Investment and Jiangxi Naipu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cultural Investment Holdings and Jiangxi Naipu Mining, you can compare the effects of market volatilities on Cultural Investment and Jiangxi Naipu 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 Cultural Investment with a short position of Jiangxi Naipu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cultural Investment and Jiangxi Naipu.

Diversification Opportunities for Cultural Investment and Jiangxi Naipu

0.82

Correlation Coefficient

Cultural Investment  Jiangxi Naipu

Very poor diversification

The 3 months correlation between Cultural and Jiangxi is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cultural Investment Holdings and Jiangxi Naipu Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangxi Naipu Mining and Cultural Investment 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 Cultural Investment Holdings are associated (or correlated) with Jiangxi Naipu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangxi Naipu Mining has no effect on the direction of Cultural Investment i.e., Cultural Investment and Jiangxi Naipu go up and down completely randomly.

Pair Corralation between Cultural Investment and Jiangxi Naipu

Assuming the 90 days trading horizon Cultural Investment Holdings is expected to generate 1.22 times more return on investment than Jiangxi Naipu. However, Cultural Investment is 1.22 times more volatile than Jiangxi Naipu Mining. It trades about -0.09 of its potential returns per unit of risk. Jiangxi Naipu Mining is currently generating about -0.2 per unit of risk. If you would invest  244.00  in Cultural Investment Holdings on December 11, 2024 and sell it today you would lose (33.00) from holding Cultural Investment Holdings or give up 13.52% of portfolio value over 90 days.

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

Cultural Investment Holdings  vs.  Jiangxi Naipu Mining

Cultural Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cultural Investment Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Jiangxi Naipu Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jiangxi Naipu Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Cultural Investment and Jiangxi Naipu

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

The idea behind Cultural Investment Holdings and Jiangxi Naipu Mining 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.