Correlation Between Yunnan Jianzhijia and XinJiang GuoTong

Can any of the company-specific risk be diversified away by investing in both Yunnan Jianzhijia and XinJiang GuoTong 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 XinJiang GuoTong 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 XinJiang GuoTong Pipeline, you can compare the effects of market volatilities on Yunnan Jianzhijia and XinJiang GuoTong 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 XinJiang GuoTong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yunnan Jianzhijia and XinJiang GuoTong.

Diversification Opportunities for Yunnan Jianzhijia and XinJiang GuoTong

0.56

Correlation Coefficient

Yunnan Jianzhijia  XinJiang GuoTong

Very weak diversification

The 3 months correlation between Yunnan and XinJiang is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Yunnan Jianzhijia Health Chain and XinJiang GuoTong Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XinJiang GuoTong Pipeline 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 XinJiang GuoTong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XinJiang GuoTong Pipeline has no effect on the direction of Yunnan Jianzhijia i.e., Yunnan Jianzhijia and XinJiang GuoTong go up and down completely randomly.

Pair Corralation between Yunnan Jianzhijia and XinJiang GuoTong

Assuming the 90 days trading horizon Yunnan Jianzhijia Health Chain is expected to under-perform the XinJiang GuoTong. But the stock apears to be less risky and, when comparing its historical volatility, Yunnan Jianzhijia Health Chain is 1.21 times less risky than XinJiang GuoTong. The stock trades about -0.07 of its potential returns per unit of risk. The XinJiang GuoTong Pipeline is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  883.00  in XinJiang GuoTong Pipeline on December 26, 2024 and sell it today you would earn a total of  45.00  from holding XinJiang GuoTong Pipeline or generate 5.1% return on investment over 90 days.

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

Yunnan Jianzhijia Health Chain  vs.  XinJiang GuoTong Pipeline

Yunnan Jianzhijia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yunnan Jianzhijia Health Chain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

XinJiang GuoTong Pipeline

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Yunnan Jianzhijia and XinJiang GuoTong

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

The idea behind Yunnan Jianzhijia Health Chain and XinJiang GuoTong Pipeline 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.