Correlation Between Fujian Anjoy and Jiangxi JDL

Can any of the company-specific risk be diversified away by investing in both Fujian Anjoy and Jiangxi JDL 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 Jiangxi JDL 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 Jiangxi JDL Environmental, you can compare the effects of market volatilities on Fujian Anjoy and Jiangxi JDL 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 Jiangxi JDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Anjoy and Jiangxi JDL.

Diversification Opportunities for Fujian Anjoy and Jiangxi JDL

0.8

Correlation Coefficient

Fujian Anjoy  Jiangxi JDL

Very poor diversification

The 3 months correlation between Fujian and Jiangxi is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Anjoy Foods and Jiangxi JDL Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangxi JDL Environmental 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 Jiangxi JDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangxi JDL Environmental has no effect on the direction of Fujian Anjoy i.e., Fujian Anjoy and Jiangxi JDL go up and down completely randomly.

Pair Corralation between Fujian Anjoy and Jiangxi JDL

Assuming the 90 days trading horizon Fujian Anjoy Foods is expected to generate 1.44 times more return on investment than Jiangxi JDL. However, Fujian Anjoy is 1.44 times more volatile than Jiangxi JDL Environmental. It trades about -0.06 of its potential returns per unit of risk. Jiangxi JDL Environmental is currently generating about -0.11 per unit of risk. If you would invest  8,491  in Fujian Anjoy Foods on December 4, 2024 and sell it today you would lose (606.00) from holding Fujian Anjoy Foods or give up 7.14% of portfolio value over 90 days.

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

Fujian Anjoy Foods  vs.  Jiangxi JDL Environmental

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Jiangxi JDL Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jiangxi JDL Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Fujian Anjoy and Jiangxi JDL

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

The idea behind Fujian Anjoy Foods and Jiangxi JDL Environmental 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.