Correlation Between Jinhui Liquor and Dhc Software

Can any of the company-specific risk be diversified away by investing in both Jinhui Liquor and Dhc Software 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 Jinhui Liquor and Dhc Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jinhui Liquor Co and Dhc Software Co, you can compare the effects of market volatilities on Jinhui Liquor and Dhc Software 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 Jinhui Liquor with a short position of Dhc Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinhui Liquor and Dhc Software.

Diversification Opportunities for Jinhui Liquor and Dhc Software

0.77

Correlation Coefficient

Jinhui Liquor  Dhc Software

Poor diversification

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

Pair Corralation between Jinhui Liquor and Dhc Software

Assuming the 90 days trading horizon Jinhui Liquor Co is expected to under-perform the Dhc Software. But the stock apears to be less risky and, when comparing its historical volatility, Jinhui Liquor Co is 1.15 times less risky than Dhc Software. The stock trades about -0.01 of its potential returns per unit of risk. The Dhc Software Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  555.00  in Dhc Software Co on September 20, 2024 and sell it today you would earn a total of  220.00  from holding Dhc Software Co or generate 39.64% return on investment over 90 days.

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

Jinhui Liquor Co  vs.  Dhc Software Co

Jinhui Liquor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jinhui Liquor Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jinhui Liquor sustained solid returns over the last few months and may actually be approaching a breakup point.

Dhc Software

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dhc Software Co are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dhc Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jinhui Liquor and Dhc Software

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

The idea behind Jinhui Liquor Co and Dhc Software Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.