Correlation Between Hainan Haiqi and Jiangyin Jianghua

Can any of the company-specific risk be diversified away by investing in both Hainan Haiqi and Jiangyin Jianghua 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 Hainan Haiqi and Jiangyin Jianghua into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hainan Haiqi Transportation and Jiangyin Jianghua Microelectronics, you can compare the effects of market volatilities on Hainan Haiqi and Jiangyin Jianghua 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 Hainan Haiqi with a short position of Jiangyin Jianghua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hainan Haiqi and Jiangyin Jianghua.

Diversification Opportunities for Hainan Haiqi and Jiangyin Jianghua

0.63

Correlation Coefficient

Hainan Haiqi  Jiangyin Jianghua

Poor diversification

The 3 months correlation between Hainan and Jiangyin is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Haiqi Transportation and Jiangyin Jianghua Microelectro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangyin Jianghua and Hainan Haiqi 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 Hainan Haiqi Transportation are associated (or correlated) with Jiangyin Jianghua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangyin Jianghua has no effect on the direction of Hainan Haiqi i.e., Hainan Haiqi and Jiangyin Jianghua go up and down completely randomly.

Pair Corralation between Hainan Haiqi and Jiangyin Jianghua

Assuming the 90 days trading horizon Hainan Haiqi Transportation is not expected to generate positive returns. However, Hainan Haiqi Transportation is 1.02 times less risky than Jiangyin Jianghua. It waists most of its returns potential to compensate for thr risk taken. Jiangyin Jianghua is generating about -0.03 per unit of risk. If you would invest  1,857  in Hainan Haiqi Transportation on December 26, 2024 and sell it today you would lose (29.00) from holding Hainan Haiqi Transportation or give up 1.56% of portfolio value over 90 days.

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

Hainan Haiqi Transportation  vs.  Jiangyin Jianghua Microelectro

Hainan Haiqi Transpo

Risk-Adjusted Performance

Very Weak

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

Jiangyin Jianghua

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Hainan Haiqi and Jiangyin Jianghua

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

The idea behind Hainan Haiqi Transportation and Jiangyin Jianghua Microelectronics 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.