Correlation Between HeBei Jinniu and Hi Trend

Can any of the company-specific risk be diversified away by investing in both HeBei Jinniu and Hi Trend 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 Hi Trend 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 Hi Trend TechCo, you can compare the effects of market volatilities on HeBei Jinniu and Hi Trend 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 Hi Trend. Check out your portfolio center. Please also check ongoing floating volatility patterns of HeBei Jinniu and Hi Trend.

Diversification Opportunities for HeBei Jinniu and Hi Trend

-0.34

Correlation Coefficient

HeBei Jinniu  Hi Trend

Very good diversification

The 3 months correlation between HeBei and 688391 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding HeBei Jinniu Chemical and Hi Trend TechCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Trend TechCo 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 Hi Trend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Trend TechCo has no effect on the direction of HeBei Jinniu i.e., HeBei Jinniu and Hi Trend go up and down completely randomly.

Pair Corralation between HeBei Jinniu and Hi Trend

Assuming the 90 days trading horizon HeBei Jinniu Chemical is expected to generate 1.45 times more return on investment than Hi Trend. However, HeBei Jinniu is 1.45 times more volatile than Hi Trend TechCo. It trades about 0.08 of its potential returns per unit of risk. Hi Trend TechCo is currently generating about -0.27 per unit of risk. If you would invest  524.00  in HeBei Jinniu Chemical on October 21, 2024 and sell it today you would earn a total of  26.00  from holding HeBei Jinniu Chemical or generate 4.96% return on investment over 90 days.

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

HeBei Jinniu Chemical  vs.  Hi Trend TechCo

HeBei Jinniu Chemical

Risk-Adjusted Performance

10 of 100

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.

Hi Trend TechCo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hi Trend TechCo 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with HeBei Jinniu and Hi Trend

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

The idea behind HeBei Jinniu Chemical and Hi Trend TechCo 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.