Correlation Between Yunnan Jianzhijia and Xiangyang Automobile

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Can any of the company-specific risk be diversified away by investing in both Yunnan Jianzhijia and Xiangyang Automobile 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 Yunnan Jianzhijia and Xiangyang Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yunnan Jianzhijia Health Chain and Xiangyang Automobile Bearing, you can compare the effects of market volatilities on Yunnan Jianzhijia and Xiangyang Automobile 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 Yunnan Jianzhijia with a short position of Xiangyang Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yunnan Jianzhijia and Xiangyang Automobile.

Diversification Opportunities for Yunnan Jianzhijia and Xiangyang Automobile

YunnanXiangyangDiversified AwayYunnanXiangyangDiversified Away100%
0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Yunnan and Xiangyang is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Yunnan Jianzhijia Health Chain and Xiangyang Automobile Bearing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiangyang Automobile and Yunnan Jianzhijia 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 Yunnan Jianzhijia Health Chain are associated (or correlated) with Xiangyang Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiangyang Automobile has no effect on the direction of Yunnan Jianzhijia i.e., Yunnan Jianzhijia and Xiangyang Automobile go up and down completely randomly.

Pair Corralation between Yunnan Jianzhijia and Xiangyang Automobile

Assuming the 90 days trading horizon Yunnan Jianzhijia is expected to generate 1.62 times less return on investment than Xiangyang Automobile. But when comparing it to its historical volatility, Yunnan Jianzhijia Health Chain is 1.18 times less risky than Xiangyang Automobile. It trades about 0.04 of its potential returns per unit of risk. Xiangyang Automobile Bearing is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  564.00  in Xiangyang Automobile Bearing on October 31, 2024 and sell it today you would earn a total of  48.00  from holding Xiangyang Automobile Bearing or generate 8.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Yunnan Jianzhijia Health Chain  vs.  Xiangyang Automobile Bearing

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -100102030
JavaScript chart by amCharts 3.21.15605266 000678
       Timeline  
Yunnan Jianzhijia 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Yunnan Jianzhijia Health Chain are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yunnan Jianzhijia may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanJan2022242628
Xiangyang Automobile 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Xiangyang Automobile Bearing are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiangyang Automobile sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanJan5.566.577.58

Yunnan Jianzhijia and Xiangyang Automobile Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-11.42-8.55-5.68-2.820.02.795.688.5711.4614.35 0.0200.0250.030
JavaScript chart by amCharts 3.21.15605266 000678
       Returns  

Pair Trading with Yunnan Jianzhijia and Xiangyang Automobile

The main advantage of trading using opposite Yunnan Jianzhijia and Xiangyang Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yunnan Jianzhijia position performs unexpectedly, Xiangyang Automobile 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 Xiangyang Automobile will offset losses from the drop in Xiangyang Automobile's long position.
The idea behind Yunnan Jianzhijia Health Chain and Xiangyang Automobile Bearing 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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