Correlation Between Xingguang Agricultural and Jiajia Food

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

By analyzing existing cross correlation between Xingguang Agricultural Mach and Jiajia Food Group, you can compare the effects of market volatilities on Xingguang Agricultural and Jiajia Food 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 Xingguang Agricultural with a short position of Jiajia Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xingguang Agricultural and Jiajia Food.

Diversification Opportunities for Xingguang Agricultural and Jiajia Food

0.63

Correlation Coefficient

Xingguang Agricultural  Jiajia Food

Poor diversification

The 3 months correlation between Xingguang and Jiajia is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Xingguang Agricultural Mach and Jiajia Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiajia Food Group and Xingguang Agricultural 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 Xingguang Agricultural Mach are associated (or correlated) with Jiajia Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiajia Food Group has no effect on the direction of Xingguang Agricultural i.e., Xingguang Agricultural and Jiajia Food go up and down completely randomly.

Pair Corralation between Xingguang Agricultural and Jiajia Food

Assuming the 90 days trading horizon Xingguang Agricultural Mach is expected to under-perform the Jiajia Food. In addition to that, Xingguang Agricultural is 2.19 times more volatile than Jiajia Food Group. It trades about -0.03 of its total potential returns per unit of risk. Jiajia Food Group is currently generating about 0.05 per unit of volatility. If you would invest  479.00  in Jiajia Food Group on December 26, 2024 and sell it today you would earn a total of  22.00  from holding Jiajia Food Group or generate 4.59% return on investment over 90 days.

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

Xingguang Agricultural Mach  vs.  Jiajia Food Group

Xingguang Agricultural

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xingguang Agricultural Mach 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.

Jiajia Food Group

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Xingguang Agricultural and Jiajia Food

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

The idea behind Xingguang Agricultural Mach and Jiajia Food Group 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.