Correlation Between Jiangsu Phoenix and Yangmei Chemical

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

By analyzing existing cross correlation between Jiangsu Phoenix Publishing and Yangmei Chemical Co, you can compare the effects of market volatilities on Jiangsu Phoenix and Yangmei Chemical 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 Phoenix with a short position of Yangmei Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Phoenix and Yangmei Chemical.

Diversification Opportunities for Jiangsu Phoenix and Yangmei Chemical

-0.2

Correlation Coefficient

Jiangsu Phoenix  Yangmei Chemical

Good diversification

The 3 months correlation between Jiangsu and Yangmei is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Phoenix Publishing and Yangmei Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yangmei Chemical and Jiangsu Phoenix 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 Phoenix Publishing are associated (or correlated) with Yangmei Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yangmei Chemical has no effect on the direction of Jiangsu Phoenix i.e., Jiangsu Phoenix and Yangmei Chemical go up and down completely randomly.

Pair Corralation between Jiangsu Phoenix and Yangmei Chemical

Assuming the 90 days trading horizon Jiangsu Phoenix Publishing is expected to generate 0.48 times more return on investment than Yangmei Chemical. However, Jiangsu Phoenix Publishing is 2.09 times less risky than Yangmei Chemical. It trades about 0.2 of its potential returns per unit of risk. Yangmei Chemical Co is currently generating about -0.02 per unit of risk. If you would invest  1,038  in Jiangsu Phoenix Publishing on September 22, 2024 and sell it today you would earn a total of  82.00  from holding Jiangsu Phoenix Publishing or generate 7.9% return on investment over 90 days.

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

Jiangsu Phoenix Publishing  vs.  Yangmei Chemical Co

Jiangsu Phoenix Publ

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Phoenix Publishing are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Phoenix may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Yangmei Chemical

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yangmei Chemical Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yangmei Chemical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiangsu Phoenix and Yangmei Chemical

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

The idea behind Jiangsu Phoenix Publishing and Yangmei Chemical Co 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.