Correlation Between JCHX Mining and Xinjiang Communications

Can any of the company-specific risk be diversified away by investing in both JCHX Mining and Xinjiang Communications 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 Xinjiang Communications 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 Xinjiang Communications Construction, you can compare the effects of market volatilities on JCHX Mining and Xinjiang Communications 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 Xinjiang Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of JCHX Mining and Xinjiang Communications.

Diversification Opportunities for JCHX Mining and Xinjiang Communications

0.26

Correlation Coefficient

JCHX Mining  Xinjiang Communications

Modest diversification

The 3 months correlation between JCHX and Xinjiang is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding JCHX Mining Management and Xinjiang Communications Constr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Communications 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 Xinjiang Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Communications has no effect on the direction of JCHX Mining i.e., JCHX Mining and Xinjiang Communications go up and down completely randomly.

Pair Corralation between JCHX Mining and Xinjiang Communications

Assuming the 90 days trading horizon JCHX Mining is expected to generate 9.69 times less return on investment than Xinjiang Communications. But when comparing it to its historical volatility, JCHX Mining Management is 1.09 times less risky than Xinjiang Communications. It trades about 0.02 of its potential returns per unit of risk. Xinjiang Communications Construction is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  964.00  in Xinjiang Communications Construction on September 2, 2024 and sell it today you would earn a total of  316.00  from holding Xinjiang Communications Construction or generate 32.78% return on investment over 90 days.

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

JCHX Mining Management  vs.  Xinjiang Communications Constr

JCHX Mining Management

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JCHX Mining Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, JCHX Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Xinjiang Communications

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with JCHX Mining and Xinjiang Communications

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

The idea behind JCHX Mining Management and Xinjiang Communications Construction 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.