Correlation Between Jiangsu Xinri and China International

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

Diversification Opportunities for Jiangsu Xinri and China International

0.81

Correlation Coefficient

Jiangsu Xinri  China International

Very poor diversification

The 3 months correlation between Jiangsu and China is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Xinri E Vehicle and China International Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China International 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 China International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China International has no effect on the direction of Jiangsu Xinri i.e., Jiangsu Xinri and China International go up and down completely randomly.

Pair Corralation between Jiangsu Xinri and China International

Assuming the 90 days trading horizon Jiangsu Xinri is expected to generate 2.98 times less return on investment than China International. But when comparing it to its historical volatility, Jiangsu Xinri E Vehicle is 2.23 times less risky than China International. It trades about 0.11 of its potential returns per unit of risk. China International Capital is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,143  in China International Capital on December 4, 2024 and sell it today you would earn a total of  314.00  from holding China International Capital or generate 9.99% 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.  China International Capital

Jiangsu Xinri E

Risk-Adjusted Performance

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 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.

China International

Risk-Adjusted Performance

Very Weak

Over the last 90 days China International Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China International 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 China International

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

The idea behind Jiangsu Xinri E Vehicle and China International Capital 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.