Correlation Between Jiangsu Flowers and Lander Sports

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

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

Diversification Opportunities for Jiangsu Flowers and Lander Sports

0.23

Correlation Coefficient

Jiangsu Flowers  Lander Sports

Modest diversification

The 3 months correlation between Jiangsu and Lander is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Flowers King and Lander Sports Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lander Sports Development and Jiangsu Flowers 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 Flowers King are associated (or correlated) with Lander Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lander Sports Development has no effect on the direction of Jiangsu Flowers i.e., Jiangsu Flowers and Lander Sports go up and down completely randomly.

Pair Corralation between Jiangsu Flowers and Lander Sports

Assuming the 90 days trading horizon Jiangsu Flowers King is expected to under-perform the Lander Sports. In addition to that, Jiangsu Flowers is 1.92 times more volatile than Lander Sports Development. It trades about -0.03 of its total potential returns per unit of risk. Lander Sports Development is currently generating about -0.05 per unit of volatility. If you would invest  345.00  in Lander Sports Development on October 23, 2024 and sell it today you would lose (21.00) from holding Lander Sports Development or give up 6.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Jiangsu Flowers King  vs.  Lander Sports Development

Jiangsu Flowers King

Risk-Adjusted Performance

6 of 100

OK

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

Lander Sports Development

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Jiangsu Flowers and Lander Sports

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

The idea behind Jiangsu Flowers King and Lander Sports Development 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.