Correlation Between Jiahe Foods and Elite Color

Can any of the company-specific risk be diversified away by investing in both Jiahe Foods and Elite Color 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 Jiahe Foods and Elite Color into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiahe Foods Industry and Elite Color Environmental, you can compare the effects of market volatilities on Jiahe Foods and Elite Color 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 Jiahe Foods with a short position of Elite Color. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiahe Foods and Elite Color.

Diversification Opportunities for Jiahe Foods and Elite Color

0.62

Correlation Coefficient

Jiahe Foods  Elite Color

Poor diversification

The 3 months correlation between Jiahe and Elite is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Jiahe Foods Industry and Elite Color Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Color Environmental and Jiahe Foods 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 Jiahe Foods Industry are associated (or correlated) with Elite Color. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Color Environmental has no effect on the direction of Jiahe Foods i.e., Jiahe Foods and Elite Color go up and down completely randomly.

Pair Corralation between Jiahe Foods and Elite Color

Assuming the 90 days trading horizon Jiahe Foods is expected to generate 1.66 times less return on investment than Elite Color. In addition to that, Jiahe Foods is 2.42 times more volatile than Elite Color Environmental. It trades about 0.02 of its total potential returns per unit of risk. Elite Color Environmental is currently generating about 0.1 per unit of volatility. If you would invest  621.00  in Elite Color Environmental on December 24, 2024 and sell it today you would earn a total of  55.00  from holding Elite Color Environmental or generate 8.86% return on investment over 90 days.

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

Jiahe Foods Industry  vs.  Elite Color Environmental

Jiahe Foods Industry

Risk-Adjusted Performance

Weak

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

Elite Color Environmental

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elite Color Environmental are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Elite Color may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Jiahe Foods and Elite Color

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

The idea behind Jiahe Foods Industry and Elite Color Environmental 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.