Correlation Between Beijing Baolande and JCHX Mining

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

By analyzing existing cross correlation between Beijing Baolande Software and JCHX Mining Management, you can compare the effects of market volatilities on Beijing Baolande and JCHX Mining 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 Beijing Baolande with a short position of JCHX Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Baolande and JCHX Mining.

Diversification Opportunities for Beijing Baolande and JCHX Mining

0.46

Correlation Coefficient

Beijing Baolande  JCHX Mining

Very weak diversification

The 3 months correlation between Beijing and JCHX is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Baolande Software and JCHX Mining Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCHX Mining Management and Beijing Baolande 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 Beijing Baolande Software are associated (or correlated) with JCHX Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCHX Mining Management has no effect on the direction of Beijing Baolande i.e., Beijing Baolande and JCHX Mining go up and down completely randomly.

Pair Corralation between Beijing Baolande and JCHX Mining

Assuming the 90 days trading horizon Beijing Baolande Software is expected to under-perform the JCHX Mining. In addition to that, Beijing Baolande is 2.03 times more volatile than JCHX Mining Management. It trades about -0.02 of its total potential returns per unit of risk. JCHX Mining Management is currently generating about 0.15 per unit of volatility. If you would invest  3,800  in JCHX Mining Management on October 26, 2024 and sell it today you would earn a total of  226.00  from holding JCHX Mining Management or generate 5.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Beijing Baolande Software  vs.  JCHX Mining Management

Beijing Baolande Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijing Baolande Software 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

JCHX Mining Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JCHX Mining Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JCHX Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Beijing Baolande and JCHX Mining

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

The idea behind Beijing Baolande Software and JCHX Mining Management 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.