Correlation Between Jiangsu Yueda and Tinavi Medical

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

Diversification Opportunities for Jiangsu Yueda and Tinavi Medical

0.85

Correlation Coefficient

Jiangsu Yueda  Tinavi Medical

Very poor diversification

The 3 months correlation between Jiangsu and Tinavi is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Yueda Investment and Tinavi Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tinavi Medical Techn 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 Tinavi Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tinavi Medical Techn has no effect on the direction of Jiangsu Yueda i.e., Jiangsu Yueda and Tinavi Medical go up and down completely randomly.

Pair Corralation between Jiangsu Yueda and Tinavi Medical

Assuming the 90 days trading horizon Jiangsu Yueda Investment is expected to under-perform the Tinavi Medical. But the stock apears to be less risky and, when comparing its historical volatility, Jiangsu Yueda Investment is 1.8 times less risky than Tinavi Medical. The stock trades about -0.15 of its potential returns per unit of risk. The Tinavi Medical Technologies is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,044  in Tinavi Medical Technologies on October 8, 2024 and sell it today you would lose (137.00) from holding Tinavi Medical Technologies or give up 13.12% of portfolio value over 90 days.

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

Jiangsu Yueda Investment  vs.  Tinavi Medical Technologies

Jiangsu Yueda Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jiangsu Yueda Investment has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Tinavi Medical Techn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tinavi Medical Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Jiangsu Yueda and Tinavi Medical

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

The idea behind Jiangsu Yueda Investment and Tinavi Medical Technologies 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.