Correlation Between Jiangsu Financial and Hubei Yingtong

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

Diversification Opportunities for Jiangsu Financial and Hubei Yingtong

JiangsuHubeiDiversified AwayJiangsuHubeiDiversified Away100%
0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between Jiangsu and Hubei is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Financial Leasing and Hubei Yingtong Telecommunicati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Yingtong Telec 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 Hubei Yingtong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Yingtong Telec has no effect on the direction of Jiangsu Financial i.e., Jiangsu Financial and Hubei Yingtong go up and down completely randomly.

Pair Corralation between Jiangsu Financial and Hubei Yingtong

Assuming the 90 days trading horizon Jiangsu Financial Leasing is expected to generate 0.32 times more return on investment than Hubei Yingtong. However, Jiangsu Financial Leasing is 3.12 times less risky than Hubei Yingtong. It trades about 0.01 of its potential returns per unit of risk. Hubei Yingtong Telecommunication is currently generating about -0.03 per unit of risk. If you would invest  506.00  in Jiangsu Financial Leasing on October 10, 2024 and sell it today you would earn a total of  2.00  from holding Jiangsu Financial Leasing or generate 0.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Jiangsu Financial Leasing  vs.  Hubei Yingtong Telecommunicati

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -15-10-5051015
JavaScript chart by amCharts 3.21.15600901 002861
       Timeline  
Jiangsu Financial Leasing 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan4.955.15.25.35.45.5
Hubei Yingtong Telec 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hubei Yingtong Telecommunication 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan111213141516

Jiangsu Financial and Hubei Yingtong Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.15-2.36-1.57-0.780.00.751.512.283.04 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15600901 002861
       Returns  

Pair Trading with Jiangsu Financial and Hubei Yingtong

The main advantage of trading using opposite Jiangsu Financial and Hubei Yingtong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiangsu Financial position performs unexpectedly, Hubei Yingtong 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 Hubei Yingtong will offset losses from the drop in Hubei Yingtong's long position.
The idea behind Jiangsu Financial Leasing and Hubei Yingtong Telecommunication 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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