Correlation Between Hefei Metalforming and JA Solar

Can any of the company-specific risk be diversified away by investing in both Hefei Metalforming and JA Solar 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 Hefei Metalforming and JA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hefei Metalforming Mach and JA Solar Technology, you can compare the effects of market volatilities on Hefei Metalforming and JA Solar 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 Hefei Metalforming with a short position of JA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hefei Metalforming and JA Solar.

Diversification Opportunities for Hefei Metalforming and JA Solar

0.66

Correlation Coefficient

Hefei Metalforming  JA Solar

Poor diversification

The 3 months correlation between Hefei and 002459 is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hefei Metalforming Mach and JA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JA Solar Technology and Hefei Metalforming 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 Hefei Metalforming Mach are associated (or correlated) with JA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JA Solar Technology has no effect on the direction of Hefei Metalforming i.e., Hefei Metalforming and JA Solar go up and down completely randomly.

Pair Corralation between Hefei Metalforming and JA Solar

Assuming the 90 days trading horizon Hefei Metalforming Mach is expected to generate 0.95 times more return on investment than JA Solar. However, Hefei Metalforming Mach is 1.06 times less risky than JA Solar. It trades about 0.04 of its potential returns per unit of risk. JA Solar Technology is currently generating about 0.03 per unit of risk. If you would invest  658.00  in Hefei Metalforming Mach on October 10, 2024 and sell it today you would earn a total of  30.00  from holding Hefei Metalforming Mach or generate 4.56% return on investment over 90 days.

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

Hefei Metalforming Mach  vs.  JA Solar Technology

Hefei Metalforming Mach

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hefei Metalforming Mach are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hefei Metalforming may actually be approaching a critical reversion point that can send shares even higher in February 2025.

JA Solar Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JA Solar Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JA Solar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hefei Metalforming and JA Solar

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

The idea behind Hefei Metalforming Mach and JA Solar Technology 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.