Correlation Between Jiangsu Flowers and Lushang Property

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

Diversification Opportunities for Jiangsu Flowers and Lushang Property

-0.22

Correlation Coefficient

Jiangsu Flowers  Lushang Property

Very good diversification

The 3 months correlation between Jiangsu and Lushang is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Flowers King and Lushang Property Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lushang Property 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 Lushang Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lushang Property has no effect on the direction of Jiangsu Flowers i.e., Jiangsu Flowers and Lushang Property go up and down completely randomly.

Pair Corralation between Jiangsu Flowers and Lushang Property

Assuming the 90 days trading horizon Jiangsu Flowers King is expected to under-perform the Lushang Property. In addition to that, Jiangsu Flowers is 1.84 times more volatile than Lushang Property Co. It trades about -0.16 of its total potential returns per unit of risk. Lushang Property Co is currently generating about -0.08 per unit of volatility. If you would invest  849.00  in Lushang Property Co on December 26, 2024 and sell it today you would lose (88.00) from holding Lushang Property Co or give up 10.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Jiangsu Flowers King  vs.  Lushang Property Co

Jiangsu Flowers King

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jiangsu Flowers King 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lushang Property

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lushang Property Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Jiangsu Flowers and Lushang Property

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

The idea behind Jiangsu Flowers King and Lushang Property 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.