Correlation Between Jiangsu Yueda and Soochow Securities

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

Diversification Opportunities for Jiangsu Yueda and Soochow Securities

0.66

Correlation Coefficient

Jiangsu Yueda  Soochow Securities

Poor diversification

The 3 months correlation between Jiangsu and Soochow is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Yueda Investment and Soochow Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soochow Securities 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 Soochow Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soochow Securities has no effect on the direction of Jiangsu Yueda i.e., Jiangsu Yueda and Soochow Securities go up and down completely randomly.

Pair Corralation between Jiangsu Yueda and Soochow Securities

Assuming the 90 days trading horizon Jiangsu Yueda Investment is expected to generate 1.32 times more return on investment than Soochow Securities. However, Jiangsu Yueda is 1.32 times more volatile than Soochow Securities Co. It trades about 0.03 of its potential returns per unit of risk. Soochow Securities Co is currently generating about -0.03 per unit of risk. If you would invest  426.00  in Jiangsu Yueda Investment on October 25, 2024 and sell it today you would earn a total of  11.00  from holding Jiangsu Yueda Investment or generate 2.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Jiangsu Yueda Investment  vs.  Soochow Securities Co

Jiangsu Yueda Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Yueda Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jiangsu Yueda is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Soochow Securities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jiangsu Yueda and Soochow Securities

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

The idea behind Jiangsu Yueda Investment and Soochow Securities Co 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.