Correlation Between Juneyao Airlines and Jilin Jlu

Can any of the company-specific risk be diversified away by investing in both Juneyao Airlines and Jilin Jlu 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 Juneyao Airlines and Jilin Jlu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Juneyao Airlines and Jilin Jlu Communication, you can compare the effects of market volatilities on Juneyao Airlines and Jilin Jlu 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 Juneyao Airlines with a short position of Jilin Jlu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Juneyao Airlines and Jilin Jlu.

Diversification Opportunities for Juneyao Airlines and Jilin Jlu

0.44

Correlation Coefficient

Juneyao Airlines  Jilin Jlu

Very weak diversification

The 3 months correlation between Juneyao and Jilin is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Juneyao Airlines and Jilin Jlu Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jilin Jlu Communication and Juneyao Airlines 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 Juneyao Airlines are associated (or correlated) with Jilin Jlu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jilin Jlu Communication has no effect on the direction of Juneyao Airlines i.e., Juneyao Airlines and Jilin Jlu go up and down completely randomly.

Pair Corralation between Juneyao Airlines and Jilin Jlu

Assuming the 90 days trading horizon Juneyao Airlines is expected to generate 1.01 times less return on investment than Jilin Jlu. In addition to that, Juneyao Airlines is 1.13 times more volatile than Jilin Jlu Communication. It trades about 0.05 of its total potential returns per unit of risk. Jilin Jlu Communication is currently generating about 0.05 per unit of volatility. If you would invest  949.00  in Jilin Jlu Communication on December 10, 2024 and sell it today you would earn a total of  17.00  from holding Jilin Jlu Communication or generate 1.79% return on investment over 90 days.

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

Juneyao Airlines  vs.  Jilin Jlu Communication

Juneyao Airlines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Juneyao Airlines 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.

Jilin Jlu Communication

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Juneyao Airlines and Jilin Jlu

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

The idea behind Juneyao Airlines and Jilin Jlu Communication 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.