Correlation Between Jiangsu Yueda and Qiaoyin Environmental

Can any of the company-specific risk be diversified away by investing in both Jiangsu Yueda and Qiaoyin Environmental 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 Qiaoyin Environmental 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 Qiaoyin Environmental Tech, you can compare the effects of market volatilities on Jiangsu Yueda and Qiaoyin Environmental 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 Qiaoyin Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Yueda and Qiaoyin Environmental.

Diversification Opportunities for Jiangsu Yueda and Qiaoyin Environmental

0.79

Correlation Coefficient

Jiangsu Yueda  Qiaoyin Environmental

Poor diversification

The 3 months correlation between Jiangsu and Qiaoyin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Yueda Investment and Qiaoyin Environmental Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qiaoyin Environmental 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 Qiaoyin Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qiaoyin Environmental has no effect on the direction of Jiangsu Yueda i.e., Jiangsu Yueda and Qiaoyin Environmental go up and down completely randomly.

Pair Corralation between Jiangsu Yueda and Qiaoyin Environmental

Assuming the 90 days trading horizon Jiangsu Yueda is expected to generate 1.13 times less return on investment than Qiaoyin Environmental. In addition to that, Jiangsu Yueda is 1.06 times more volatile than Qiaoyin Environmental Tech. It trades about 0.18 of its total potential returns per unit of risk. Qiaoyin Environmental Tech is currently generating about 0.22 per unit of volatility. If you would invest  991.00  in Qiaoyin Environmental Tech on September 19, 2024 and sell it today you would earn a total of  100.00  from holding Qiaoyin Environmental Tech or generate 10.09% return on investment over 90 days.

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

Jiangsu Yueda Investment  vs.  Qiaoyin Environmental Tech

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.

Qiaoyin Environmental

Risk-Adjusted Performance

15 of 100

Solid

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

Pair Trading with Jiangsu Yueda and Qiaoyin Environmental

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

The idea behind Jiangsu Yueda Investment and Qiaoyin Environmental Tech 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.