Correlation Between Hunan Oil and JiShi Media

Can any of the company-specific risk be diversified away by investing in both Hunan Oil and JiShi Media 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 Hunan Oil and JiShi Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hunan Oil Pump and JiShi Media Co, you can compare the effects of market volatilities on Hunan Oil and JiShi Media 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 Hunan Oil with a short position of JiShi Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hunan Oil and JiShi Media.

Diversification Opportunities for Hunan Oil and JiShi Media

0.35

Correlation Coefficient

Hunan Oil  JiShi Media

Weak diversification

The 3 months correlation between Hunan and JiShi is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Hunan Oil Pump and JiShi Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JiShi Media and Hunan Oil 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 Hunan Oil Pump are associated (or correlated) with JiShi Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JiShi Media has no effect on the direction of Hunan Oil i.e., Hunan Oil and JiShi Media go up and down completely randomly.

Pair Corralation between Hunan Oil and JiShi Media

Assuming the 90 days trading horizon Hunan Oil Pump is expected to generate 1.37 times more return on investment than JiShi Media. However, Hunan Oil is 1.37 times more volatile than JiShi Media Co. It trades about 0.15 of its potential returns per unit of risk. JiShi Media Co is currently generating about 0.03 per unit of risk. If you would invest  2,593  in Hunan Oil Pump on December 23, 2024 and sell it today you would earn a total of  1,176  from holding Hunan Oil Pump or generate 45.35% return on investment over 90 days.

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

Hunan Oil Pump  vs.  JiShi Media Co

Hunan Oil Pump

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hunan Oil Pump are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hunan Oil sustained solid returns over the last few months and may actually be approaching a breakup point.

JiShi Media

Risk-Adjusted Performance

Weak

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

Pair Trading with Hunan Oil and JiShi Media

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

The idea behind Hunan Oil Pump and JiShi Media 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.