Correlation Between Orient Sec and Jiamei Food

Can any of the company-specific risk be diversified away by investing in both Orient Sec and Jiamei Food 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 Jiamei Food 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 Jiamei Food Packaging, you can compare the effects of market volatilities on Orient Sec and Jiamei Food 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 Jiamei Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Sec and Jiamei Food.

Diversification Opportunities for Orient Sec and Jiamei Food

0.79

Correlation Coefficient

Orient Sec  Jiamei Food

Poor diversification

The 3 months correlation between Orient and Jiamei is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Orient Sec Co and Jiamei Food Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiamei Food Packaging 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 Jiamei Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiamei Food Packaging has no effect on the direction of Orient Sec i.e., Orient Sec and Jiamei Food go up and down completely randomly.

Pair Corralation between Orient Sec and Jiamei Food

Assuming the 90 days trading horizon Orient Sec is expected to generate 24.15 times less return on investment than Jiamei Food. In addition to that, Orient Sec is 1.14 times more volatile than Jiamei Food Packaging. It trades about 0.01 of its total potential returns per unit of risk. Jiamei Food Packaging is currently generating about 0.14 per unit of volatility. If you would invest  302.00  in Jiamei Food Packaging on September 21, 2024 and sell it today you would earn a total of  35.00  from holding Jiamei Food Packaging or generate 11.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Orient Sec Co  vs.  Jiamei Food Packaging

Orient Sec

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Sec Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Orient Sec sustained solid returns over the last few months and may actually be approaching a breakup point.

Jiamei Food Packaging

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jiamei Food Packaging are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiamei Food sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orient Sec and Jiamei Food

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

The idea behind Orient Sec Co and Jiamei Food Packaging 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.