Correlation Between Yunnan Jianzhijia and GreenTech Environmental

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

Diversification Opportunities for Yunnan Jianzhijia and GreenTech Environmental

-0.06

Correlation Coefficient

Yunnan Jianzhijia  GreenTech Environmental

Good diversification

The 3 months correlation between Yunnan and GreenTech is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Yunnan Jianzhijia Health Chain and GreenTech Environmental Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenTech Environmental 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 GreenTech Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenTech Environmental has no effect on the direction of Yunnan Jianzhijia i.e., Yunnan Jianzhijia and GreenTech Environmental go up and down completely randomly.

Pair Corralation between Yunnan Jianzhijia and GreenTech Environmental

Assuming the 90 days trading horizon Yunnan Jianzhijia Health Chain is expected to under-perform the GreenTech Environmental. But the stock apears to be less risky and, when comparing its historical volatility, Yunnan Jianzhijia Health Chain is 1.14 times less risky than GreenTech Environmental. The stock trades about -0.07 of its potential returns per unit of risk. The GreenTech Environmental Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,375  in GreenTech Environmental Co on December 26, 2024 and sell it today you would earn a total of  262.00  from holding GreenTech Environmental Co or generate 19.05% return on investment over 90 days.

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

Yunnan Jianzhijia Health Chain  vs.  GreenTech Environmental Co

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.

GreenTech Environmental

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GreenTech Environmental Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GreenTech Environmental sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yunnan Jianzhijia and GreenTech Environmental

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

The idea behind Yunnan Jianzhijia Health Chain and GreenTech Environmental Co 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.