Correlation Between Sino Medical and JA Solar

Can any of the company-specific risk be diversified away by investing in both Sino Medical and JA Solar 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 Sino Medical and JA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sino Medical Sciences and JA Solar Technology, you can compare the effects of market volatilities on Sino Medical and JA Solar 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 Sino Medical with a short position of JA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino Medical and JA Solar.

Diversification Opportunities for Sino Medical and JA Solar

0.12

Correlation Coefficient

Sino Medical  JA Solar

Average diversification

The 3 months correlation between Sino and 002459 is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sino Medical Sciences and JA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JA Solar Technology and Sino Medical 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 Sino Medical Sciences are associated (or correlated) with JA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JA Solar Technology has no effect on the direction of Sino Medical i.e., Sino Medical and JA Solar go up and down completely randomly.

Pair Corralation between Sino Medical and JA Solar

Assuming the 90 days trading horizon Sino Medical Sciences is expected to generate 0.97 times more return on investment than JA Solar. However, Sino Medical Sciences is 1.04 times less risky than JA Solar. It trades about 0.02 of its potential returns per unit of risk. JA Solar Technology is currently generating about -0.09 per unit of risk. If you would invest  1,037  in Sino Medical Sciences on December 25, 2024 and sell it today you would earn a total of  13.00  from holding Sino Medical Sciences or generate 1.25% return on investment over 90 days.

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

Sino Medical Sciences  vs.  JA Solar Technology

Sino Medical Sciences

Risk-Adjusted Performance

Weak

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

JA Solar Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days JA Solar Technology 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 Sino Medical and JA Solar

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

The idea behind Sino Medical Sciences and JA Solar Technology 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.