Correlation Between Suzhou Weizhixiang and Jiangxi Ganfeng

Can any of the company-specific risk be diversified away by investing in both Suzhou Weizhixiang and Jiangxi Ganfeng 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 Suzhou Weizhixiang and Jiangxi Ganfeng into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Suzhou Weizhixiang Food and Jiangxi Ganfeng Lithium, you can compare the effects of market volatilities on Suzhou Weizhixiang and Jiangxi Ganfeng 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 Suzhou Weizhixiang with a short position of Jiangxi Ganfeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suzhou Weizhixiang and Jiangxi Ganfeng.

Diversification Opportunities for Suzhou Weizhixiang and Jiangxi Ganfeng

0.55

Correlation Coefficient

Suzhou Weizhixiang  Jiangxi Ganfeng

Very weak diversification

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

Pair Corralation between Suzhou Weizhixiang and Jiangxi Ganfeng

Assuming the 90 days trading horizon Suzhou Weizhixiang Food is expected to under-perform the Jiangxi Ganfeng. In addition to that, Suzhou Weizhixiang is 1.93 times more volatile than Jiangxi Ganfeng Lithium. It trades about -0.29 of its total potential returns per unit of risk. Jiangxi Ganfeng Lithium is currently generating about -0.39 per unit of volatility. If you would invest  3,953  in Jiangxi Ganfeng Lithium on October 9, 2024 and sell it today you would lose (568.00) from holding Jiangxi Ganfeng Lithium or give up 14.37% of portfolio value over 90 days.

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

Suzhou Weizhixiang Food  vs.  Jiangxi Ganfeng Lithium

Suzhou Weizhixiang Food

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Suzhou Weizhixiang Food are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Suzhou Weizhixiang may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Jiangxi Ganfeng Lithium

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Suzhou Weizhixiang and Jiangxi Ganfeng

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

The idea behind Suzhou Weizhixiang Food and Jiangxi Ganfeng Lithium 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 Commodity Directory module to find actively traded commodities issued by global exchanges.