Correlation Between Jiangsu Financial and Suzhou Novoprotein

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

Diversification Opportunities for Jiangsu Financial and Suzhou Novoprotein

0.35

Correlation Coefficient

Jiangsu Financial  Suzhou Novoprotein

Weak diversification

The 3 months correlation between Jiangsu and Suzhou is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Financial Leasing and Suzhou Novoprotein Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzhou Novoprotein 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 Suzhou Novoprotein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzhou Novoprotein has no effect on the direction of Jiangsu Financial i.e., Jiangsu Financial and Suzhou Novoprotein go up and down completely randomly.

Pair Corralation between Jiangsu Financial and Suzhou Novoprotein

Assuming the 90 days trading horizon Jiangsu Financial Leasing is expected to generate 0.72 times more return on investment than Suzhou Novoprotein. However, Jiangsu Financial Leasing is 1.39 times less risky than Suzhou Novoprotein. It trades about -0.04 of its potential returns per unit of risk. Suzhou Novoprotein Scientific is currently generating about -0.29 per unit of risk. If you would invest  519.00  in Jiangsu Financial Leasing on October 5, 2024 and sell it today you would lose (5.00) from holding Jiangsu Financial Leasing or give up 0.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Jiangsu Financial Leasing  vs.  Suzhou Novoprotein Scientific

Jiangsu Financial Leasing

Risk-Adjusted Performance

0 of 100

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 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.

Suzhou Novoprotein

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suzhou Novoprotein Scientific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Jiangsu Financial and Suzhou Novoprotein

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

The idea behind Jiangsu Financial Leasing and Suzhou Novoprotein Scientific 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.