Correlation Between Jiahe Foods and Thinkingdom Media

Can any of the company-specific risk be diversified away by investing in both Jiahe Foods and Thinkingdom Media 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 Thinkingdom Media 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 Thinkingdom Media Group, you can compare the effects of market volatilities on Jiahe Foods and Thinkingdom Media 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 Thinkingdom Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiahe Foods and Thinkingdom Media.

Diversification Opportunities for Jiahe Foods and Thinkingdom Media

0.96

Correlation Coefficient

Jiahe Foods  Thinkingdom Media

Almost no diversification

The 3 months correlation between Jiahe and Thinkingdom is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Jiahe Foods Industry and Thinkingdom Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thinkingdom Media 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 Thinkingdom Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thinkingdom Media has no effect on the direction of Jiahe Foods i.e., Jiahe Foods and Thinkingdom Media go up and down completely randomly.

Pair Corralation between Jiahe Foods and Thinkingdom Media

Assuming the 90 days trading horizon Jiahe Foods is expected to generate 1.03 times less return on investment than Thinkingdom Media. In addition to that, Jiahe Foods is 1.09 times more volatile than Thinkingdom Media Group. It trades about 0.2 of its total potential returns per unit of risk. Thinkingdom Media Group is currently generating about 0.22 per unit of volatility. If you would invest  1,516  in Thinkingdom Media Group on September 2, 2024 and sell it today you would earn a total of  720.00  from holding Thinkingdom Media Group or generate 47.49% return on investment over 90 days.

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

Jiahe Foods Industry  vs.  Thinkingdom Media Group

Jiahe Foods Industry

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jiahe Foods Industry are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiahe Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Thinkingdom Media

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thinkingdom Media Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Thinkingdom Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiahe Foods and Thinkingdom Media

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

The idea behind Jiahe Foods Industry and Thinkingdom Media Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.