Correlation Between Zhangjiagang Freetrade and Jahen Household

Can any of the company-specific risk be diversified away by investing in both Zhangjiagang Freetrade and Jahen Household 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 Zhangjiagang Freetrade and Jahen Household into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zhangjiagang Freetrade Science and Jahen Household Products, you can compare the effects of market volatilities on Zhangjiagang Freetrade and Jahen Household 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 Zhangjiagang Freetrade with a short position of Jahen Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhangjiagang Freetrade and Jahen Household.

Diversification Opportunities for Zhangjiagang Freetrade and Jahen Household

0.9

Correlation Coefficient

Zhangjiagang Freetrade  Jahen Household

Almost no diversification

The 3 months correlation between Zhangjiagang and Jahen is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Zhangjiagang Freetrade Science and Jahen Household Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jahen Household Products and Zhangjiagang Freetrade 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 Zhangjiagang Freetrade Science are associated (or correlated) with Jahen Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jahen Household Products has no effect on the direction of Zhangjiagang Freetrade i.e., Zhangjiagang Freetrade and Jahen Household go up and down completely randomly.

Pair Corralation between Zhangjiagang Freetrade and Jahen Household

Assuming the 90 days trading horizon Zhangjiagang Freetrade Science is expected to generate 0.66 times more return on investment than Jahen Household. However, Zhangjiagang Freetrade Science is 1.51 times less risky than Jahen Household. It trades about 0.01 of its potential returns per unit of risk. Jahen Household Products is currently generating about -0.01 per unit of risk. If you would invest  404.00  in Zhangjiagang Freetrade Science on September 5, 2024 and sell it today you would lose (4.00) from holding Zhangjiagang Freetrade Science or give up 0.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.79%
Values	Daily Returns

Zhangjiagang Freetrade Science  vs.  Jahen Household Products

Zhangjiagang Freetrade

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zhangjiagang Freetrade Science are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhangjiagang Freetrade sustained solid returns over the last few months and may actually be approaching a breakup point.

Jahen Household Products

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jahen Household Products are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jahen Household sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhangjiagang Freetrade and Jahen Household

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

The idea behind Zhangjiagang Freetrade Science and Jahen Household Products 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.