Correlation Between Jonjee Hi-tech and Beijing Wandong

Can any of the company-specific risk be diversified away by investing in both Jonjee Hi-tech and Beijing Wandong 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 Jonjee Hi-tech and Beijing Wandong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jonjee Hi tech Industrial and Beijing Wandong Medical, you can compare the effects of market volatilities on Jonjee Hi-tech and Beijing Wandong 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 Jonjee Hi-tech with a short position of Beijing Wandong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jonjee Hi-tech and Beijing Wandong.

Diversification Opportunities for Jonjee Hi-tech and Beijing Wandong

-0.25

Correlation Coefficient

Jonjee Hi-tech  Beijing Wandong

Very good diversification

The 3 months correlation between Jonjee and Beijing is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Jonjee Hi tech Industrial and Beijing Wandong Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Wandong Medical and Jonjee Hi-tech 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 Jonjee Hi tech Industrial are associated (or correlated) with Beijing Wandong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Wandong Medical has no effect on the direction of Jonjee Hi-tech i.e., Jonjee Hi-tech and Beijing Wandong go up and down completely randomly.

Pair Corralation between Jonjee Hi-tech and Beijing Wandong

Assuming the 90 days trading horizon Jonjee Hi tech Industrial is expected to under-perform the Beijing Wandong. But the stock apears to be less risky and, when comparing its historical volatility, Jonjee Hi tech Industrial is 1.44 times less risky than Beijing Wandong. The stock trades about -0.1 of its potential returns per unit of risk. The Beijing Wandong Medical is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,539  in Beijing Wandong Medical on December 26, 2024 and sell it today you would earn a total of  140.00  from holding Beijing Wandong Medical or generate 9.1% return on investment over 90 days.

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

Jonjee Hi tech Industrial  vs.  Beijing Wandong Medical

Jonjee Hi tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jonjee Hi tech Industrial 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.

Beijing Wandong Medical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Wandong Medical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Wandong may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Jonjee Hi-tech and Beijing Wandong

The main advantage of trading using opposite Jonjee Hi-tech and Beijing Wandong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jonjee Hi-tech position performs unexpectedly, Beijing Wandong 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 Beijing Wandong will offset losses from the drop in Beijing Wandong's long position.

The idea behind Jonjee Hi tech Industrial and Beijing Wandong Medical 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.