Correlation Between Yindu Kitchen and Jiangyin Jianghua

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

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

Diversification Opportunities for Yindu Kitchen and Jiangyin Jianghua

-0.38

Correlation Coefficient

Yindu Kitchen  Jiangyin Jianghua

Very good diversification

The 3 months correlation between Yindu and Jiangyin is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Yindu Kitchen Equipment and Jiangyin Jianghua Microelectro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangyin Jianghua and Yindu Kitchen 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 Yindu Kitchen Equipment 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 Yindu Kitchen i.e., Yindu Kitchen and Jiangyin Jianghua go up and down completely randomly.

Pair Corralation between Yindu Kitchen and Jiangyin Jianghua

Assuming the 90 days trading horizon Yindu Kitchen Equipment is expected to generate 0.75 times more return on investment than Jiangyin Jianghua. However, Yindu Kitchen Equipment is 1.33 times less risky than Jiangyin Jianghua. It trades about 0.05 of its potential returns per unit of risk. Jiangyin Jianghua Microelectronics is currently generating about 0.02 per unit of risk. If you would invest  1,591  in Yindu Kitchen Equipment on September 20, 2024 and sell it today you would earn a total of  816.00  from holding Yindu Kitchen Equipment or generate 51.29% return on investment over 90 days.

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

Yindu Kitchen Equipment  vs.  Jiangyin Jianghua Microelectro

Yindu Kitchen Equipment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yindu Kitchen Equipment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Yindu Kitchen 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

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangyin Jianghua Microelectronics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangyin Jianghua sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yindu Kitchen and Jiangyin Jianghua

The main advantage of trading using opposite Yindu Kitchen and Jiangyin Jianghua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yindu Kitchen 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 Yindu Kitchen Equipment 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.