Correlation Between Fujian Anjoy and Guangzhou Jointas

Can any of the company-specific risk be diversified away by investing in both Fujian Anjoy and Guangzhou Jointas 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 Fujian Anjoy and Guangzhou Jointas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fujian Anjoy Foods and Guangzhou Jointas Chemical, you can compare the effects of market volatilities on Fujian Anjoy and Guangzhou Jointas 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 Fujian Anjoy with a short position of Guangzhou Jointas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Anjoy and Guangzhou Jointas.

Diversification Opportunities for Fujian Anjoy and Guangzhou Jointas

0.27

Correlation Coefficient

Fujian Anjoy  Guangzhou Jointas

Modest diversification

The 3 months correlation between Fujian and Guangzhou is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Anjoy Foods and Guangzhou Jointas Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Jointas and Fujian Anjoy 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 Fujian Anjoy Foods are associated (or correlated) with Guangzhou Jointas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Jointas has no effect on the direction of Fujian Anjoy i.e., Fujian Anjoy and Guangzhou Jointas go up and down completely randomly.

Pair Corralation between Fujian Anjoy and Guangzhou Jointas

Assuming the 90 days trading horizon Fujian Anjoy Foods is expected to under-perform the Guangzhou Jointas. But the stock apears to be less risky and, when comparing its historical volatility, Fujian Anjoy Foods is 1.12 times less risky than Guangzhou Jointas. The stock trades about -0.01 of its potential returns per unit of risk. The Guangzhou Jointas Chemical is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  515.00  in Guangzhou Jointas Chemical on December 27, 2024 and sell it today you would earn a total of  81.00  from holding Guangzhou Jointas Chemical or generate 15.73% return on investment over 90 days.

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

Fujian Anjoy Foods  vs.  Guangzhou Jointas Chemical

Fujian Anjoy Foods

Risk-Adjusted Performance

Very Weak

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

Guangzhou Jointas

Risk-Adjusted Performance

Good

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

Pair Trading with Fujian Anjoy and Guangzhou Jointas

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

The idea behind Fujian Anjoy Foods and Guangzhou Jointas Chemical 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.