Correlation Between Shanghai CEO and JCHX Mining

Can any of the company-specific risk be diversified away by investing in both Shanghai CEO and JCHX Mining 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 JCHX Mining 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 JCHX Mining Management, you can compare the effects of market volatilities on Shanghai CEO and JCHX Mining 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 JCHX Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai CEO and JCHX Mining.

Diversification Opportunities for Shanghai CEO and JCHX Mining

0.28

Correlation Coefficient

Shanghai CEO  JCHX Mining

Modest diversification

The 3 months correlation between Shanghai and JCHX is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai CEO Environmental and JCHX Mining Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCHX Mining Management 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 JCHX Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCHX Mining Management has no effect on the direction of Shanghai CEO i.e., Shanghai CEO and JCHX Mining go up and down completely randomly.

Pair Corralation between Shanghai CEO and JCHX Mining

Assuming the 90 days trading horizon Shanghai CEO Environmental is expected to under-perform the JCHX Mining. In addition to that, Shanghai CEO is 1.17 times more volatile than JCHX Mining Management. It trades about -0.11 of its total potential returns per unit of risk. JCHX Mining Management is currently generating about -0.03 per unit of volatility. If you would invest  3,939  in JCHX Mining Management on December 2, 2024 and sell it today you would lose (157.00) from holding JCHX Mining Management or give up 3.99% of portfolio value over 90 days.

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

Shanghai CEO Environmental  vs.  JCHX Mining Management

Shanghai CEO Environ

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

JCHX Mining Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days JCHX Mining Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JCHX Mining 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 JCHX Mining

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

The idea behind Shanghai CEO Environmental and JCHX Mining Management 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.