Correlation Between Jiangsu Xinri and Changchun High

Can any of the company-specific risk be diversified away by investing in both Jiangsu Xinri and Changchun High 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 Changchun High 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 Changchun High New, you can compare the effects of market volatilities on Jiangsu Xinri and Changchun High 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 Changchun High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Xinri and Changchun High.

Diversification Opportunities for Jiangsu Xinri and Changchun High

0.61

Correlation Coefficient

Jiangsu Xinri  Changchun High

Poor diversification

The 3 months correlation between Jiangsu and Changchun is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Xinri E Vehicle and Changchun High New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changchun High New 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 Changchun High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changchun High New has no effect on the direction of Jiangsu Xinri i.e., Jiangsu Xinri and Changchun High go up and down completely randomly.

Pair Corralation between Jiangsu Xinri and Changchun High

Assuming the 90 days trading horizon Jiangsu Xinri E Vehicle is expected to generate 1.78 times more return on investment than Changchun High. However, Jiangsu Xinri is 1.78 times more volatile than Changchun High New. It trades about 0.0 of its potential returns per unit of risk. Changchun High New is currently generating about -0.26 per unit of risk. If you would invest  1,083  in Jiangsu Xinri E Vehicle on September 28, 2024 and sell it today you would lose (6.00) from holding Jiangsu Xinri E Vehicle or give up 0.55% of portfolio value over 90 days.

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

Jiangsu Xinri E Vehicle  vs.  Changchun High New

Jiangsu Xinri E

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, Jiangsu Xinri is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Changchun High New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Changchun High New 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 Jiangsu Xinri and Changchun High

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

The idea behind Jiangsu Xinri E Vehicle and Changchun High New 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.