Correlation Between Zhuzhou Kibing and Jiangsu Jinling

Can any of the company-specific risk be diversified away by investing in both Zhuzhou Kibing and Jiangsu Jinling 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 Zhuzhou Kibing and Jiangsu Jinling into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zhuzhou Kibing Group and Jiangsu Jinling Sports, you can compare the effects of market volatilities on Zhuzhou Kibing and Jiangsu Jinling 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 Zhuzhou Kibing with a short position of Jiangsu Jinling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhuzhou Kibing and Jiangsu Jinling.

Diversification Opportunities for Zhuzhou Kibing and Jiangsu Jinling

0.58

Correlation Coefficient

Zhuzhou Kibing  Jiangsu Jinling

Very weak diversification

The 3 months correlation between Zhuzhou and Jiangsu is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Zhuzhou Kibing Group and Jiangsu Jinling Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Jinling Sports and Zhuzhou Kibing 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 Zhuzhou Kibing Group are associated (or correlated) with Jiangsu Jinling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Jinling Sports has no effect on the direction of Zhuzhou Kibing i.e., Zhuzhou Kibing and Jiangsu Jinling go up and down completely randomly.

Pair Corralation between Zhuzhou Kibing and Jiangsu Jinling

Assuming the 90 days trading horizon Zhuzhou Kibing Group is expected to under-perform the Jiangsu Jinling. But the stock apears to be less risky and, when comparing its historical volatility, Zhuzhou Kibing Group is 1.88 times less risky than Jiangsu Jinling. The stock trades about -0.22 of its potential returns per unit of risk. The Jiangsu Jinling Sports is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,375  in Jiangsu Jinling Sports on September 26, 2024 and sell it today you would lose (68.00) from holding Jiangsu Jinling Sports or give up 4.95% of portfolio value over 90 days.

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

Zhuzhou Kibing Group  vs.  Jiangsu Jinling Sports

Zhuzhou Kibing Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zhuzhou Kibing Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhuzhou Kibing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Jiangsu Jinling Sports

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Jinling Sports are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Jinling sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhuzhou Kibing and Jiangsu Jinling

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

The idea behind Zhuzhou Kibing Group and Jiangsu Jinling Sports 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.