Correlation Between JCHX Mining and ISoftStone Information

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

Diversification Opportunities for JCHX Mining and ISoftStone Information

0.34

Correlation Coefficient

JCHX Mining  ISoftStone Information

Weak diversification

The 3 months correlation between JCHX and ISoftStone is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding JCHX Mining Management and iSoftStone Information Technol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSoftStone Information 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 ISoftStone Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSoftStone Information has no effect on the direction of JCHX Mining i.e., JCHX Mining and ISoftStone Information go up and down completely randomly.

Pair Corralation between JCHX Mining and ISoftStone Information

Assuming the 90 days trading horizon JCHX Mining is expected to generate 4.55 times less return on investment than ISoftStone Information. But when comparing it to its historical volatility, JCHX Mining Management is 2.15 times less risky than ISoftStone Information. It trades about 0.09 of its potential returns per unit of risk. iSoftStone Information Technology is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,359  in iSoftStone Information Technology on September 14, 2024 and sell it today you would earn a total of  3,136  from holding iSoftStone Information Technology or generate 93.36% 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.  iSoftStone Information Technol

JCHX Mining Management

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JCHX Mining Management are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JCHX Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

iSoftStone Information

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iSoftStone Information Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ISoftStone Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JCHX Mining and ISoftStone Information

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

The idea behind JCHX Mining Management and iSoftStone Information Technology 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.