Correlation Between Jiangxi JDL and Beijing SPC

Can any of the company-specific risk be diversified away by investing in both Jiangxi JDL and Beijing SPC 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 Jiangxi JDL and Beijing SPC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiangxi JDL Environmental and Beijing SPC Environment, you can compare the effects of market volatilities on Jiangxi JDL and Beijing SPC 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 Jiangxi JDL with a short position of Beijing SPC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangxi JDL and Beijing SPC.

Diversification Opportunities for Jiangxi JDL and Beijing SPC

0.93

Correlation Coefficient

Jiangxi JDL  Beijing SPC

Almost no diversification

The 3 months correlation between Jiangxi and Beijing is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Jiangxi JDL Environmental and Beijing SPC Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing SPC Environment and Jiangxi JDL 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 Jiangxi JDL Environmental are associated (or correlated) with Beijing SPC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing SPC Environment has no effect on the direction of Jiangxi JDL i.e., Jiangxi JDL and Beijing SPC go up and down completely randomly.

Pair Corralation between Jiangxi JDL and Beijing SPC

Assuming the 90 days trading horizon Jiangxi JDL Environmental is expected to generate 1.15 times more return on investment than Beijing SPC. However, Jiangxi JDL is 1.15 times more volatile than Beijing SPC Environment. It trades about -0.02 of its potential returns per unit of risk. Beijing SPC Environment is currently generating about -0.03 per unit of risk. If you would invest  1,435  in Jiangxi JDL Environmental on December 2, 2024 and sell it today you would lose (339.00) from holding Jiangxi JDL Environmental or give up 23.62% of portfolio value over 90 days.

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

Jiangxi JDL Environmental  vs.  Beijing SPC Environment

Jiangxi JDL Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jiangxi JDL Environmental 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.

Beijing SPC Environment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beijing SPC Environment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Jiangxi JDL and Beijing SPC

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

The idea behind Jiangxi JDL Environmental and Beijing SPC Environment 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.