Correlation Between Orient Sec and Jiaozuo Wanfang

Can any of the company-specific risk be diversified away by investing in both Orient Sec and Jiaozuo Wanfang 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 Orient Sec and Jiaozuo Wanfang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Orient Sec Co and Jiaozuo Wanfang Aluminum, you can compare the effects of market volatilities on Orient Sec and Jiaozuo Wanfang 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 Orient Sec with a short position of Jiaozuo Wanfang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Sec and Jiaozuo Wanfang.

Diversification Opportunities for Orient Sec and Jiaozuo Wanfang

-0.19

Correlation Coefficient

Orient Sec  Jiaozuo Wanfang

Good diversification

The 3 months correlation between Orient and Jiaozuo is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Orient Sec Co and Jiaozuo Wanfang Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiaozuo Wanfang Aluminum and Orient Sec 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 Orient Sec Co are associated (or correlated) with Jiaozuo Wanfang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiaozuo Wanfang Aluminum has no effect on the direction of Orient Sec i.e., Orient Sec and Jiaozuo Wanfang go up and down completely randomly.

Pair Corralation between Orient Sec and Jiaozuo Wanfang

Assuming the 90 days trading horizon Orient Sec Co is expected to under-perform the Jiaozuo Wanfang. But the stock apears to be less risky and, when comparing its historical volatility, Orient Sec Co is 1.71 times less risky than Jiaozuo Wanfang. The stock trades about -0.13 of its potential returns per unit of risk. The Jiaozuo Wanfang Aluminum is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  652.00  in Jiaozuo Wanfang Aluminum on December 27, 2024 and sell it today you would earn a total of  210.00  from holding Jiaozuo Wanfang Aluminum or generate 32.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.55%
Values	Daily Returns

Orient Sec Co  vs.  Jiaozuo Wanfang Aluminum

Orient Sec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orient Sec Co 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Jiaozuo Wanfang Aluminum

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jiaozuo Wanfang Aluminum are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiaozuo Wanfang sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orient Sec and Jiaozuo Wanfang

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

The idea behind Orient Sec Co and Jiaozuo Wanfang Aluminum 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.