Correlation Between JCHX Mining and Guangzhou Restaurants

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

Diversification Opportunities for JCHX Mining and Guangzhou Restaurants

0.28

Correlation Coefficient

JCHX Mining  Guangzhou Restaurants

Modest diversification

The 3 months correlation between JCHX and Guangzhou is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding JCHX Mining Management and Guangzhou Restaurants Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Restaurants 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 Guangzhou Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Restaurants has no effect on the direction of JCHX Mining i.e., JCHX Mining and Guangzhou Restaurants go up and down completely randomly.

Pair Corralation between JCHX Mining and Guangzhou Restaurants

Assuming the 90 days trading horizon JCHX Mining Management is expected to under-perform the Guangzhou Restaurants. In addition to that, JCHX Mining is 1.05 times more volatile than Guangzhou Restaurants Group. It trades about -0.03 of its total potential returns per unit of risk. Guangzhou Restaurants Group is currently generating about 0.17 per unit of volatility. If you would invest  1,330  in Guangzhou Restaurants Group on September 20, 2024 and sell it today you would earn a total of  389.00  from holding Guangzhou Restaurants Group or generate 29.25% 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.  Guangzhou Restaurants Group

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 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.

Guangzhou Restaurants

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Restaurants Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Restaurants sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JCHX Mining and Guangzhou Restaurants

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

The idea behind JCHX Mining Management and Guangzhou Restaurants Group 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.