Correlation Between HeBei Jinniu and China World

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Can any of the company-specific risk be diversified away by investing in both HeBei Jinniu and China World 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 HeBei Jinniu and China World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HeBei Jinniu Chemical and China World Trade, you can compare the effects of market volatilities on HeBei Jinniu and China World 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 HeBei Jinniu with a short position of China World. Check out your portfolio center. Please also check ongoing floating volatility patterns of HeBei Jinniu and China World.

Diversification Opportunities for HeBei Jinniu and China World

HeBeiChinaDiversified AwayHeBeiChinaDiversified Away100%
0.17
  Correlation Coefficient

Average diversification

The 3 months correlation between HeBei and China is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding HeBei Jinniu Chemical and China World Trade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China World Trade and HeBei Jinniu 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 HeBei Jinniu Chemical are associated (or correlated) with China World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China World Trade has no effect on the direction of HeBei Jinniu i.e., HeBei Jinniu and China World go up and down completely randomly.

Pair Corralation between HeBei Jinniu and China World

Assuming the 90 days trading horizon HeBei Jinniu Chemical is expected to generate 2.57 times more return on investment than China World. However, HeBei Jinniu is 2.57 times more volatile than China World Trade. It trades about 0.13 of its potential returns per unit of risk. China World Trade is currently generating about 0.04 per unit of risk. If you would invest  424.00  in HeBei Jinniu Chemical on October 21, 2024 and sell it today you would earn a total of  126.00  from holding HeBei Jinniu Chemical or generate 29.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

HeBei Jinniu Chemical  vs.  China World Trade

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 01020304050
JavaScript chart by amCharts 3.21.15600722 600007
       Timeline  
HeBei Jinniu Chemical 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in HeBei Jinniu Chemical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HeBei Jinniu sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan4.555.566.5
China World Trade 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in China World Trade are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, China World is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2222.52323.52424.525

HeBei Jinniu and China World Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-11.2-8.39-5.58-2.770.05023.016.029.0412.05 0.050.100.150.20
JavaScript chart by amCharts 3.21.15600722 600007
       Returns  

Pair Trading with HeBei Jinniu and China World

The main advantage of trading using opposite HeBei Jinniu and China World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HeBei Jinniu position performs unexpectedly, China World 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 China World will offset losses from the drop in China World's long position.
The idea behind HeBei Jinniu Chemical and China World Trade 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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