Correlation Between JiShi Media and Shandong Mining

Can any of the company-specific risk be diversified away by investing in both JiShi Media and Shandong Mining 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 JiShi Media and Shandong Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JiShi Media Co and Shandong Mining Machinery, you can compare the effects of market volatilities on JiShi Media and Shandong Mining 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 JiShi Media with a short position of Shandong Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of JiShi Media and Shandong Mining.

Diversification Opportunities for JiShi Media and Shandong Mining

0.7

Correlation Coefficient

JiShi Media  Shandong Mining

Poor diversification

The 3 months correlation between JiShi and Shandong is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding JiShi Media Co and Shandong Mining Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Mining Machinery and JiShi Media 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 JiShi Media Co are associated (or correlated) with Shandong Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Mining Machinery has no effect on the direction of JiShi Media i.e., JiShi Media and Shandong Mining go up and down completely randomly.

Pair Corralation between JiShi Media and Shandong Mining

Assuming the 90 days trading horizon JiShi Media Co is expected to generate 0.87 times more return on investment than Shandong Mining. However, JiShi Media Co is 1.15 times less risky than Shandong Mining. It trades about 0.0 of its potential returns per unit of risk. Shandong Mining Machinery is currently generating about 0.0 per unit of risk. If you would invest  207.00  in JiShi Media Co on December 3, 2024 and sell it today you would lose (10.00) from holding JiShi Media Co or give up 4.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

JiShi Media Co  vs.  Shandong Mining Machinery

JiShi Media

Risk-Adjusted Performance

Very Weak

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

Shandong Mining Machinery

Risk-Adjusted Performance

Very Weak

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

Pair Trading with JiShi Media and Shandong Mining

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

The idea behind JiShi Media Co and Shandong Mining Machinery 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..