Correlation Between Shanghai CEO and Jiangnan Mould

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

By analyzing existing cross correlation between Shanghai CEO Environmental and Jiangnan Mould Plastic, you can compare the effects of market volatilities on Shanghai CEO and Jiangnan Mould 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 CEO with a short position of Jiangnan Mould. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai CEO and Jiangnan Mould.

Diversification Opportunities for Shanghai CEO and Jiangnan Mould

0.6

Correlation Coefficient

Shanghai CEO  Jiangnan Mould

Poor diversification

The 3 months correlation between Shanghai and Jiangnan is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai CEO Environmental and Jiangnan Mould Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangnan Mould Plastic and Shanghai CEO 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 CEO Environmental are associated (or correlated) with Jiangnan Mould. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangnan Mould Plastic has no effect on the direction of Shanghai CEO i.e., Shanghai CEO and Jiangnan Mould go up and down completely randomly.

Pair Corralation between Shanghai CEO and Jiangnan Mould

Assuming the 90 days trading horizon Shanghai CEO Environmental is expected to under-perform the Jiangnan Mould. In addition to that, Shanghai CEO is 1.08 times more volatile than Jiangnan Mould Plastic. It trades about -0.05 of its total potential returns per unit of risk. Jiangnan Mould Plastic is currently generating about 0.03 per unit of volatility. If you would invest  618.00  in Jiangnan Mould Plastic on October 9, 2024 and sell it today you would earn a total of  56.00  from holding Jiangnan Mould Plastic or generate 9.06% return on investment over 90 days.

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

Shanghai CEO Environmental  vs.  Jiangnan Mould Plastic

Shanghai CEO Environ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanghai CEO Environmental 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Jiangnan Mould Plastic

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Shanghai CEO and Jiangnan Mould

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

The idea behind Shanghai CEO Environmental and Jiangnan Mould Plastic 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.