Correlation Between Zhejiang Orient and Jiangsu Apon

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

By analyzing existing cross correlation between Zhejiang Orient Gene and Jiangsu Apon Medical, you can compare the effects of market volatilities on Zhejiang Orient and Jiangsu Apon 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 Orient with a short position of Jiangsu Apon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Orient and Jiangsu Apon.

Diversification Opportunities for Zhejiang Orient and Jiangsu Apon

-0.77

Correlation Coefficient

Zhejiang Orient  Jiangsu Apon

Pay attention - limited upside

The 3 months correlation between Zhejiang and Jiangsu is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Orient Gene and Jiangsu Apon Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Apon Medical and Zhejiang Orient 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 Orient Gene are associated (or correlated) with Jiangsu Apon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Apon Medical has no effect on the direction of Zhejiang Orient i.e., Zhejiang Orient and Jiangsu Apon go up and down completely randomly.

Pair Corralation between Zhejiang Orient and Jiangsu Apon

Assuming the 90 days trading horizon Zhejiang Orient Gene is expected to under-perform the Jiangsu Apon. But the stock apears to be less risky and, when comparing its historical volatility, Zhejiang Orient Gene is 2.04 times less risky than Jiangsu Apon. The stock trades about -0.04 of its potential returns per unit of risk. The Jiangsu Apon Medical is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,502  in Jiangsu Apon Medical on October 23, 2024 and sell it today you would earn a total of  450.00  from holding Jiangsu Apon Medical or generate 29.96% return on investment over 90 days.

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

Zhejiang Orient Gene  vs.  Jiangsu Apon Medical

Zhejiang Orient Gene

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jiangsu Apon Medical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Apon Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Apon sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhejiang Orient and Jiangsu Apon

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

The idea behind Zhejiang Orient Gene and Jiangsu Apon Medical 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.