Correlation Between JCHX Mining and Ningbo Kangqiang

Can any of the company-specific risk be diversified away by investing in both JCHX Mining and Ningbo Kangqiang 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 JCHX Mining and Ningbo Kangqiang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JCHX Mining Management and Ningbo Kangqiang Electronics, you can compare the effects of market volatilities on JCHX Mining and Ningbo Kangqiang 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 JCHX Mining with a short position of Ningbo Kangqiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of JCHX Mining and Ningbo Kangqiang.

Diversification Opportunities for JCHX Mining and Ningbo Kangqiang

-0.55

Correlation Coefficient

JCHX Mining  Ningbo Kangqiang

Excellent diversification

The 3 months correlation between JCHX and Ningbo is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding JCHX Mining Management and Ningbo Kangqiang Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Kangqiang Ele and JCHX Mining 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 JCHX Mining Management are associated (or correlated) with Ningbo Kangqiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Kangqiang Ele has no effect on the direction of JCHX Mining i.e., JCHX Mining and Ningbo Kangqiang go up and down completely randomly.

Pair Corralation between JCHX Mining and Ningbo Kangqiang

Assuming the 90 days trading horizon JCHX Mining is expected to generate 1.42 times less return on investment than Ningbo Kangqiang. But when comparing it to its historical volatility, JCHX Mining Management is 1.34 times less risky than Ningbo Kangqiang. It trades about 0.04 of its potential returns per unit of risk. Ningbo Kangqiang Electronics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,227  in Ningbo Kangqiang Electronics on October 11, 2024 and sell it today you would earn a total of  490.00  from holding Ningbo Kangqiang Electronics or generate 39.93% return on investment over 90 days.

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

JCHX Mining Management  vs.  Ningbo Kangqiang Electronics

JCHX Mining Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JCHX Mining Management 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.

Ningbo Kangqiang Ele

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Kangqiang Electronics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo Kangqiang sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JCHX Mining and Ningbo Kangqiang

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

The idea behind JCHX Mining Management and Ningbo Kangqiang Electronics 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.