Correlation Between Shanghai Sanyou and Jilin Yatai

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

Diversification Opportunities for Shanghai Sanyou and Jilin Yatai

-0.07

Correlation Coefficient

Shanghai Sanyou  Jilin Yatai

Good diversification

The 3 months correlation between Shanghai and Jilin is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Sanyou Medical and Jilin Yatai Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jilin Yatai Group 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 Jilin Yatai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jilin Yatai Group has no effect on the direction of Shanghai Sanyou i.e., Shanghai Sanyou and Jilin Yatai go up and down completely randomly.

Pair Corralation between Shanghai Sanyou and Jilin Yatai

Assuming the 90 days trading horizon Shanghai Sanyou Medical is expected to generate 0.79 times more return on investment than Jilin Yatai. However, Shanghai Sanyou Medical is 1.26 times less risky than Jilin Yatai. It trades about -0.04 of its potential returns per unit of risk. Jilin Yatai Group is currently generating about -0.04 per unit of risk. If you would invest  1,929  in Shanghai Sanyou Medical on December 25, 2024 and sell it today you would lose (150.00) from holding Shanghai Sanyou Medical or give up 7.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Shanghai Sanyou Medical  vs.  Jilin Yatai Group

Shanghai Sanyou Medical

Risk-Adjusted Performance

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 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.

Jilin Yatai Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jilin Yatai Group 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.

Pair Trading with Shanghai Sanyou and Jilin Yatai

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

The idea behind Shanghai Sanyou Medical and Jilin Yatai 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.