Correlation Between RoadMain T and Jiangsu Xinning

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

By analyzing existing cross correlation between RoadMain T Co and Jiangsu Xinning Modern, you can compare the effects of market volatilities on RoadMain T and Jiangsu Xinning 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 RoadMain T with a short position of Jiangsu Xinning. Check out your portfolio center. Please also check ongoing floating volatility patterns of RoadMain T and Jiangsu Xinning.

Diversification Opportunities for RoadMain T and Jiangsu Xinning

0.77

Correlation Coefficient

RoadMain T  Jiangsu Xinning

Poor diversification

The 3 months correlation between RoadMain and Jiangsu is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding RoadMain T Co and Jiangsu Xinning Modern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Xinning Modern and RoadMain T 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 RoadMain T Co are associated (or correlated) with Jiangsu Xinning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Xinning Modern has no effect on the direction of RoadMain T i.e., RoadMain T and Jiangsu Xinning go up and down completely randomly.

Pair Corralation between RoadMain T and Jiangsu Xinning

Assuming the 90 days trading horizon RoadMain T Co is expected to generate 0.72 times more return on investment than Jiangsu Xinning. However, RoadMain T Co is 1.39 times less risky than Jiangsu Xinning. It trades about 0.03 of its potential returns per unit of risk. Jiangsu Xinning Modern is currently generating about -0.01 per unit of risk. If you would invest  3,003  in RoadMain T Co on December 27, 2024 and sell it today you would earn a total of  76.00  from holding RoadMain T Co or generate 2.53% return on investment over 90 days.

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

RoadMain T Co  vs.  Jiangsu Xinning Modern

RoadMain T

Risk-Adjusted Performance

Weak

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

Jiangsu Xinning Modern

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jiangsu Xinning Modern has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jiangsu Xinning is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RoadMain T and Jiangsu Xinning

The main advantage of trading using opposite RoadMain T and Jiangsu Xinning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RoadMain T position performs unexpectedly, Jiangsu Xinning 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 Jiangsu Xinning will offset losses from the drop in Jiangsu Xinning's long position.

The idea behind RoadMain T Co and Jiangsu Xinning Modern 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.