Correlation Between Jonjee Hi and Shandong Gold

Can any of the company-specific risk be diversified away by investing in both Jonjee Hi and Shandong Gold 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 and Shandong Gold 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 Shandong Gold Mining, you can compare the effects of market volatilities on Jonjee Hi and Shandong Gold 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 with a short position of Shandong Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jonjee Hi and Shandong Gold.

Diversification Opportunities for Jonjee Hi and Shandong Gold

-0.29

Correlation Coefficient

Jonjee Hi  Shandong Gold

Very good diversification

The 3 months correlation between Jonjee and Shandong is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Jonjee Hi tech Industrial and Shandong Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Gold Mining and Jonjee Hi 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 Shandong Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Gold Mining has no effect on the direction of Jonjee Hi i.e., Jonjee Hi and Shandong Gold go up and down completely randomly.

Pair Corralation between Jonjee Hi and Shandong Gold

Assuming the 90 days trading horizon Jonjee Hi tech Industrial is expected to under-perform the Shandong Gold. In addition to that, Jonjee Hi is 1.22 times more volatile than Shandong Gold Mining. It trades about -0.03 of its total potential returns per unit of risk. Shandong Gold Mining is currently generating about 0.03 per unit of volatility. If you would invest  2,224  in Shandong Gold Mining on October 9, 2024 and sell it today you would earn a total of  217.00  from holding Shandong Gold Mining or generate 9.76% 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.  Shandong Gold Mining

Jonjee Hi tech

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, Jonjee Hi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shandong Gold Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shandong Gold Mining 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 Jonjee Hi and Shandong Gold

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

The idea behind Jonjee Hi tech Industrial and Shandong Gold Mining 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.