Correlation Between Jiangsu Xinri and Shenzhen Agricultural

Can any of the company-specific risk be diversified away by investing in both Jiangsu Xinri and Shenzhen Agricultural 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 Jiangsu Xinri and Shenzhen Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiangsu Xinri E Vehicle and Shenzhen Agricultural Products, you can compare the effects of market volatilities on Jiangsu Xinri and Shenzhen Agricultural 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 Jiangsu Xinri with a short position of Shenzhen Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Xinri and Shenzhen Agricultural.

Diversification Opportunities for Jiangsu Xinri and Shenzhen Agricultural

0.7

Correlation Coefficient

Jiangsu Xinri  Shenzhen Agricultural

Poor diversification

The 3 months correlation between Jiangsu and Shenzhen is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Xinri E Vehicle and Shenzhen Agricultural Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Agricultural and Jiangsu Xinri 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 Jiangsu Xinri E Vehicle are associated (or correlated) with Shenzhen Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Agricultural has no effect on the direction of Jiangsu Xinri i.e., Jiangsu Xinri and Shenzhen Agricultural go up and down completely randomly.

Pair Corralation between Jiangsu Xinri and Shenzhen Agricultural

Assuming the 90 days trading horizon Jiangsu Xinri E Vehicle is expected to under-perform the Shenzhen Agricultural. In addition to that, Jiangsu Xinri is 1.13 times more volatile than Shenzhen Agricultural Products. It trades about -0.05 of its total potential returns per unit of risk. Shenzhen Agricultural Products is currently generating about 0.05 per unit of volatility. If you would invest  631.00  in Shenzhen Agricultural Products on October 23, 2024 and sell it today you would earn a total of  33.00  from holding Shenzhen Agricultural Products or generate 5.23% return on investment over 90 days.

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

Jiangsu Xinri E Vehicle  vs.  Shenzhen Agricultural Products

Jiangsu Xinri E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jiangsu Xinri E Vehicle 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.

Shenzhen Agricultural

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Agricultural Products are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Agricultural may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Jiangsu Xinri and Shenzhen Agricultural

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

The idea behind Jiangsu Xinri E Vehicle and Shenzhen Agricultural Products 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..