Correlation Between Dosilicon and Jiangsu Jiangnan

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

By analyzing existing cross correlation between Dosilicon Co and Jiangsu Jiangnan Water, you can compare the effects of market volatilities on Dosilicon and Jiangsu Jiangnan 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 Dosilicon with a short position of Jiangsu Jiangnan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dosilicon and Jiangsu Jiangnan.

Diversification Opportunities for Dosilicon and Jiangsu Jiangnan

0.18

Correlation Coefficient

Dosilicon  Jiangsu Jiangnan

Average diversification

The 3 months correlation between Dosilicon and Jiangsu is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dosilicon Co and Jiangsu Jiangnan Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Jiangnan Water and Dosilicon 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 Dosilicon Co are associated (or correlated) with Jiangsu Jiangnan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Jiangnan Water has no effect on the direction of Dosilicon i.e., Dosilicon and Jiangsu Jiangnan go up and down completely randomly.

Pair Corralation between Dosilicon and Jiangsu Jiangnan

Assuming the 90 days trading horizon Dosilicon Co is expected to generate 2.93 times more return on investment than Jiangsu Jiangnan. However, Dosilicon is 2.93 times more volatile than Jiangsu Jiangnan Water. It trades about 0.11 of its potential returns per unit of risk. Jiangsu Jiangnan Water is currently generating about -0.38 per unit of risk. If you would invest  2,243  in Dosilicon Co on October 9, 2024 and sell it today you would earn a total of  181.00  from holding Dosilicon Co or generate 8.07% return on investment over 90 days.

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

Dosilicon Co  vs.  Jiangsu Jiangnan Water

Dosilicon

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jiangsu Jiangnan Water

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dosilicon and Jiangsu Jiangnan

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

The idea behind Dosilicon Co and Jiangsu Jiangnan Water 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.