Correlation Between Fujian Oriental and Jiangyin Jianghua

Can any of the company-specific risk be diversified away by investing in both Fujian Oriental and Jiangyin Jianghua 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 Fujian Oriental and Jiangyin Jianghua into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fujian Oriental Silver and Jiangyin Jianghua Microelectronics, you can compare the effects of market volatilities on Fujian Oriental and Jiangyin Jianghua 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 Fujian Oriental with a short position of Jiangyin Jianghua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Oriental and Jiangyin Jianghua.

Diversification Opportunities for Fujian Oriental and Jiangyin Jianghua

0.0

Correlation Coefficient

Fujian Oriental  Jiangyin Jianghua

Pay attention - limited upside

The 3 months correlation between Fujian and Jiangyin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Oriental Silver and Jiangyin Jianghua Microelectro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangyin Jianghua and Fujian Oriental 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 Fujian Oriental Silver are associated (or correlated) with Jiangyin Jianghua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangyin Jianghua has no effect on the direction of Fujian Oriental i.e., Fujian Oriental and Jiangyin Jianghua go up and down completely randomly.

Pair Corralation between Fujian Oriental and Jiangyin Jianghua

Assuming the 90 days trading horizon Fujian Oriental Silver is expected to under-perform the Jiangyin Jianghua. In addition to that, Fujian Oriental is 1.41 times more volatile than Jiangyin Jianghua Microelectronics. It trades about -0.08 of its total potential returns per unit of risk. Jiangyin Jianghua Microelectronics is currently generating about 0.0 per unit of volatility. If you would invest  1,718  in Jiangyin Jianghua Microelectronics on December 25, 2024 and sell it today you would lose (30.00) from holding Jiangyin Jianghua Microelectronics or give up 1.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Fujian Oriental Silver  vs.  Jiangyin Jianghua Microelectro

Fujian Oriental Silver

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fujian Oriental Silver 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.

Jiangyin Jianghua

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jiangyin Jianghua Microelectronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jiangyin Jianghua is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fujian Oriental and Jiangyin Jianghua

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

The idea behind Fujian Oriental Silver and Jiangyin Jianghua Microelectronics 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.