Correlation Between Zhejiang HISUN and Jafron Biomedical

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

By analyzing existing cross correlation between Zhejiang HISUN Biomaterials and Jafron Biomedical Co, you can compare the effects of market volatilities on Zhejiang HISUN and Jafron Biomedical 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 Zhejiang HISUN with a short position of Jafron Biomedical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang HISUN and Jafron Biomedical.

Diversification Opportunities for Zhejiang HISUN and Jafron Biomedical

-0.57

Correlation Coefficient

Zhejiang HISUN  Jafron Biomedical

Excellent diversification

The 3 months correlation between Zhejiang and Jafron is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang HISUN Biomaterials and Jafron Biomedical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jafron Biomedical and Zhejiang HISUN 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 Zhejiang HISUN Biomaterials are associated (or correlated) with Jafron Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jafron Biomedical has no effect on the direction of Zhejiang HISUN i.e., Zhejiang HISUN and Jafron Biomedical go up and down completely randomly.

Pair Corralation between Zhejiang HISUN and Jafron Biomedical

Assuming the 90 days trading horizon Zhejiang HISUN Biomaterials is expected to generate 0.74 times more return on investment than Jafron Biomedical. However, Zhejiang HISUN Biomaterials is 1.35 times less risky than Jafron Biomedical. It trades about 0.03 of its potential returns per unit of risk. Jafron Biomedical Co is currently generating about -0.12 per unit of risk. If you would invest  994.00  in Zhejiang HISUN Biomaterials on December 30, 2024 and sell it today you would earn a total of  20.00  from holding Zhejiang HISUN Biomaterials or generate 2.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Zhejiang HISUN Biomaterials  vs.  Jafron Biomedical Co

Zhejiang HISUN Bioma

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang HISUN Biomaterials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zhejiang HISUN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jafron Biomedical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jafron Biomedical Co 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 Zhejiang HISUN and Jafron Biomedical

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

The idea behind Zhejiang HISUN Biomaterials and Jafron Biomedical Co 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.