Correlation Between Industrial Securities and Jiajia Food

Can any of the company-specific risk be diversified away by investing in both Industrial Securities and Jiajia 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 Industrial Securities and Jiajia Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Industrial Securities Co and Jiajia Food Group, you can compare the effects of market volatilities on Industrial Securities and Jiajia 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 Industrial Securities with a short position of Jiajia Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Securities and Jiajia Food.

Diversification Opportunities for Industrial Securities and Jiajia Food

0.34

Correlation Coefficient

Industrial Securities  Jiajia Food

Weak diversification

The 3 months correlation between Industrial and Jiajia is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Securities Co and Jiajia Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiajia Food Group and Industrial Securities 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 Industrial Securities Co are associated (or correlated) with Jiajia Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiajia Food Group has no effect on the direction of Industrial Securities i.e., Industrial Securities and Jiajia Food go up and down completely randomly.

Pair Corralation between Industrial Securities and Jiajia Food

Assuming the 90 days trading horizon Industrial Securities is expected to generate 7.43 times less return on investment than Jiajia Food. But when comparing it to its historical volatility, Industrial Securities Co is 1.65 times less risky than Jiajia Food. It trades about 0.0 of its potential returns per unit of risk. Jiajia Food Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  417.00  in Jiajia Food Group on December 1, 2024 and sell it today you would earn a total of  35.00  from holding Jiajia Food Group or generate 8.39% return on investment over 90 days.

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

Industrial Securities Co  vs.  Jiajia Food Group

Industrial Securities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Industrial Securities Co 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.

Jiajia Food Group

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Industrial Securities and Jiajia Food

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

The idea behind Industrial Securities Co and Jiajia Food Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.