Correlation Between Shanghai Sanyou and Jahen Household

Can any of the company-specific risk be diversified away by investing in both Shanghai Sanyou and Jahen Household 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 Shanghai Sanyou and Jahen Household into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shanghai Sanyou Medical and Jahen Household Products, you can compare the effects of market volatilities on Shanghai Sanyou and Jahen Household 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 Shanghai Sanyou with a short position of Jahen Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Sanyou and Jahen Household.

Diversification Opportunities for Shanghai Sanyou and Jahen Household

0.67

Correlation Coefficient

Shanghai Sanyou  Jahen Household

Poor diversification

The 3 months correlation between Shanghai and Jahen is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Sanyou Medical and Jahen Household Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jahen Household Products and Shanghai Sanyou 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 Shanghai Sanyou Medical are associated (or correlated) with Jahen Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jahen Household Products has no effect on the direction of Shanghai Sanyou i.e., Shanghai Sanyou and Jahen Household go up and down completely randomly.

Pair Corralation between Shanghai Sanyou and Jahen Household

Assuming the 90 days trading horizon Shanghai Sanyou Medical is expected to generate 0.8 times more return on investment than Jahen Household. However, Shanghai Sanyou Medical is 1.26 times less risky than Jahen Household. It trades about 0.1 of its potential returns per unit of risk. Jahen Household Products is currently generating about -0.07 per unit of risk. If you would invest  1,929  in Shanghai Sanyou Medical on October 22, 2024 and sell it today you would earn a total of  93.00  from holding Shanghai Sanyou Medical or generate 4.82% return on investment over 90 days.

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

Shanghai Sanyou Medical  vs.  Jahen Household Products

Shanghai Sanyou Medical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jahen Household Products

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Shanghai Sanyou and Jahen Household

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

The idea behind Shanghai Sanyou Medical and Jahen Household Products 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.