Correlation Between Hefei Metalforming and Jadard Technology

Can any of the company-specific risk be diversified away by investing in both Hefei Metalforming and Jadard Technology 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 Jadard Technology 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 Jadard Technology A, you can compare the effects of market volatilities on Hefei Metalforming and Jadard Technology 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 Jadard Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hefei Metalforming and Jadard Technology.

Diversification Opportunities for Hefei Metalforming and Jadard Technology

-0.17

Correlation Coefficient

Hefei Metalforming  Jadard Technology

Good diversification

The 3 months correlation between Hefei and Jadard is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hefei Metalforming Mach and Jadard Technology A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jadard 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 Jadard Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jadard Technology has no effect on the direction of Hefei Metalforming i.e., Hefei Metalforming and Jadard Technology go up and down completely randomly.

Pair Corralation between Hefei Metalforming and Jadard Technology

Assuming the 90 days trading horizon Hefei Metalforming Mach is expected to under-perform the Jadard Technology. But the stock apears to be less risky and, when comparing its historical volatility, Hefei Metalforming Mach is 1.19 times less risky than Jadard Technology. The stock trades about -0.28 of its potential returns per unit of risk. The Jadard Technology A is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,492  in Jadard Technology A on October 12, 2024 and sell it today you would lose (17.00) from holding Jadard Technology A or give up 0.68% of portfolio value over 90 days.

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

Hefei Metalforming Mach  vs.  Jadard Technology A

Hefei Metalforming Mach

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hefei Metalforming Mach are ranked lower than 4 (%) 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.

Jadard Technology

Risk-Adjusted Performance

0 of 100

Modest

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

Pair Trading with Hefei Metalforming and Jadard Technology

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

The idea behind Hefei Metalforming Mach and Jadard Technology A 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.