Correlation Between Jiangsu Xinri and Beijing Sanyuan

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

Diversification Opportunities for Jiangsu Xinri and Beijing Sanyuan

0.85

Correlation Coefficient

Jiangsu Xinri  Beijing Sanyuan

Very poor diversification

The 3 months correlation between Jiangsu and Beijing is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Xinri E Vehicle and Beijing Sanyuan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Sanyuan Foods 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 Beijing Sanyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Sanyuan Foods has no effect on the direction of Jiangsu Xinri i.e., Jiangsu Xinri and Beijing Sanyuan go up and down completely randomly.

Pair Corralation between Jiangsu Xinri and Beijing Sanyuan

Assuming the 90 days trading horizon Jiangsu Xinri E Vehicle is expected to under-perform the Beijing Sanyuan. But the stock apears to be less risky and, when comparing its historical volatility, Jiangsu Xinri E Vehicle is 1.03 times less risky than Beijing Sanyuan. The stock trades about -0.05 of its potential returns per unit of risk. The Beijing Sanyuan Foods is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  452.00  in Beijing Sanyuan Foods on October 1, 2024 and sell it today you would earn a total of  11.00  from holding Beijing Sanyuan Foods or generate 2.43% return on investment over 90 days.

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

Jiangsu Xinri E Vehicle  vs.  Beijing Sanyuan Foods

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.

Beijing Sanyuan Foods

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Sanyuan Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Beijing Sanyuan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jiangsu Xinri and Beijing Sanyuan

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

The idea behind Jiangsu Xinri E Vehicle and Beijing Sanyuan Foods 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.