Correlation Between Jiangsu Financial and Beijing Venustech

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

By analyzing existing cross correlation between Jiangsu Financial Leasing and Beijing Venustech, you can compare the effects of market volatilities on Jiangsu Financial and Beijing Venustech 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 Financial with a short position of Beijing Venustech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Financial and Beijing Venustech.

Diversification Opportunities for Jiangsu Financial and Beijing Venustech

-0.41

Correlation Coefficient

Jiangsu Financial  Beijing Venustech

Very good diversification

The 3 months correlation between Jiangsu and Beijing is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Financial Leasing and Beijing Venustech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Venustech and Jiangsu Financial 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 Financial Leasing are associated (or correlated) with Beijing Venustech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Venustech has no effect on the direction of Jiangsu Financial i.e., Jiangsu Financial and Beijing Venustech go up and down completely randomly.

Pair Corralation between Jiangsu Financial and Beijing Venustech

Assuming the 90 days trading horizon Jiangsu Financial Leasing is expected to under-perform the Beijing Venustech. But the stock apears to be less risky and, when comparing its historical volatility, Jiangsu Financial Leasing is 5.3 times less risky than Beijing Venustech. The stock trades about -0.33 of its potential returns per unit of risk. The Beijing Venustech is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,567  in Beijing Venustech on December 5, 2024 and sell it today you would earn a total of  278.00  from holding Beijing Venustech or generate 17.74% return on investment over 90 days.

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

Jiangsu Financial Leasing  vs.  Beijing Venustech

Jiangsu Financial Leasing

Risk-Adjusted Performance

Very Weak

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

Beijing Venustech

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Venustech are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Venustech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Jiangsu Financial and Beijing Venustech

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

The idea behind Jiangsu Financial Leasing and Beijing Venustech 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 Transaction History module to view history of all your transactions and understand their impact on performance.