Correlation Between Sany Heavy and Jilin Chemical

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

By analyzing existing cross correlation between Sany Heavy Energy and Jilin Chemical Fibre, you can compare the effects of market volatilities on Sany Heavy and Jilin Chemical 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 Sany Heavy with a short position of Jilin Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sany Heavy and Jilin Chemical.

Diversification Opportunities for Sany Heavy and Jilin Chemical

0.89

Correlation Coefficient

Sany Heavy  Jilin Chemical

Very poor diversification

The 3 months correlation between Sany and Jilin is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Sany Heavy Energy and Jilin Chemical Fibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jilin Chemical Fibre and Sany Heavy 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 Sany Heavy Energy are associated (or correlated) with Jilin Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jilin Chemical Fibre has no effect on the direction of Sany Heavy i.e., Sany Heavy and Jilin Chemical go up and down completely randomly.

Pair Corralation between Sany Heavy and Jilin Chemical

Assuming the 90 days trading horizon Sany Heavy Energy is expected to generate 0.65 times more return on investment than Jilin Chemical. However, Sany Heavy Energy is 1.54 times less risky than Jilin Chemical. It trades about 0.15 of its potential returns per unit of risk. Jilin Chemical Fibre is currently generating about 0.09 per unit of risk. If you would invest  3,051  in Sany Heavy Energy on September 20, 2024 and sell it today you would earn a total of  220.00  from holding Sany Heavy Energy or generate 7.21% return on investment over 90 days.

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

Sany Heavy Energy  vs.  Jilin Chemical Fibre

Sany Heavy Energy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sany Heavy Energy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sany Heavy sustained solid returns over the last few months and may actually be approaching a breakup point.

Jilin Chemical Fibre

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jilin Chemical Fibre are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jilin Chemical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sany Heavy and Jilin Chemical

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

The idea behind Sany Heavy Energy and Jilin Chemical Fibre 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.