Correlation Between JiShi Media and Caitong Securities

Can any of the company-specific risk be diversified away by investing in both JiShi Media and Caitong Securities 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 Caitong Securities 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 Caitong Securities Co, you can compare the effects of market volatilities on JiShi Media and Caitong Securities 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 Caitong Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of JiShi Media and Caitong Securities.

Diversification Opportunities for JiShi Media and Caitong Securities

0.28

Correlation Coefficient

JiShi Media  Caitong Securities

Modest diversification

The 3 months correlation between JiShi and Caitong is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding JiShi Media Co and Caitong Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caitong Securities 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 Caitong Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caitong Securities has no effect on the direction of JiShi Media i.e., JiShi Media and Caitong Securities go up and down completely randomly.

Pair Corralation between JiShi Media and Caitong Securities

Assuming the 90 days trading horizon JiShi Media Co is expected to generate 2.1 times more return on investment than Caitong Securities. However, JiShi Media is 2.1 times more volatile than Caitong Securities Co. It trades about 0.07 of its potential returns per unit of risk. Caitong Securities Co is currently generating about -0.14 per unit of risk. If you would invest  155.00  in JiShi Media Co on October 7, 2024 and sell it today you would earn a total of  25.00  from holding JiShi Media Co or generate 16.13% return on investment over 90 days.

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

JiShi Media Co  vs.  Caitong Securities Co

JiShi Media

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JiShi Media Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JiShi Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Caitong Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caitong Securities Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with JiShi Media and Caitong Securities

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

The idea behind JiShi Media Co and Caitong Securities 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.