Correlation Between Jiangxi JDL and Elite Color

Can any of the company-specific risk be diversified away by investing in both Jiangxi JDL 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 Jiangxi JDL and Elite Color 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 Elite Color Environmental, you can compare the effects of market volatilities on Jiangxi JDL 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 Jiangxi JDL with a short position of Elite Color. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangxi JDL and Elite Color.

Diversification Opportunities for Jiangxi JDL and Elite Color

0.9

Correlation Coefficient

Jiangxi JDL  Elite Color

Almost no diversification

The 3 months correlation between Jiangxi and Elite is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Jiangxi JDL Environmental 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 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 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 Jiangxi JDL i.e., Jiangxi JDL and Elite Color go up and down completely randomly.

Pair Corralation between Jiangxi JDL and Elite Color

Assuming the 90 days trading horizon Jiangxi JDL Environmental is expected to generate 0.88 times more return on investment than Elite Color. However, Jiangxi JDL Environmental is 1.14 times less risky than Elite Color. It trades about 0.0 of its potential returns per unit of risk. Elite Color Environmental is currently generating about -0.01 per unit of risk. If you would invest  1,312  in Jiangxi JDL Environmental on September 4, 2024 and sell it today you would lose (73.00) from holding Jiangxi JDL Environmental or give up 5.56% 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.  Elite Color Environmental

Jiangxi JDL Environmental

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangxi JDL Environmental are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangxi JDL sustained solid returns over the last few months and may actually be approaching a breakup point.

Elite Color Environmental

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elite Color Environmental are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Elite Color sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiangxi JDL and Elite Color

The main advantage of trading using opposite Jiangxi JDL and Elite Color positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiangxi JDL 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 Jiangxi JDL Environmental 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.