Correlation Between Jiangsu Yueda and Wasu Media

Can any of the company-specific risk be diversified away by investing in both Jiangsu Yueda and Wasu Media 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 Jiangsu Yueda and Wasu Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiangsu Yueda Investment and Wasu Media Holding, you can compare the effects of market volatilities on Jiangsu Yueda and Wasu Media 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 Jiangsu Yueda with a short position of Wasu Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Yueda and Wasu Media.

Diversification Opportunities for Jiangsu Yueda and Wasu Media

0.96

Correlation Coefficient

Jiangsu Yueda  Wasu Media

Almost no diversification

The 3 months correlation between Jiangsu and Wasu is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Yueda Investment and Wasu Media Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasu Media Holding and Jiangsu Yueda 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 Jiangsu Yueda Investment are associated (or correlated) with Wasu Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasu Media Holding has no effect on the direction of Jiangsu Yueda i.e., Jiangsu Yueda and Wasu Media go up and down completely randomly.

Pair Corralation between Jiangsu Yueda and Wasu Media

Assuming the 90 days trading horizon Jiangsu Yueda Investment is expected to generate 0.91 times more return on investment than Wasu Media. However, Jiangsu Yueda Investment is 1.1 times less risky than Wasu Media. It trades about 0.18 of its potential returns per unit of risk. Wasu Media Holding is currently generating about 0.1 per unit of risk. If you would invest  446.00  in Jiangsu Yueda Investment on September 19, 2024 and sell it today you would earn a total of  39.00  from holding Jiangsu Yueda Investment or generate 8.74% return on investment over 90 days.

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

Jiangsu Yueda Investment  vs.  Wasu Media Holding

Jiangsu Yueda Investment

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Yueda Investment are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Yueda sustained solid returns over the last few months and may actually be approaching a breakup point.

Wasu Media Holding

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wasu Media Holding are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wasu Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiangsu Yueda and Wasu Media

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

The idea behind Jiangsu Yueda Investment and Wasu Media Holding 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.