Correlation Between Guobo Electronics and Jilin Jlu

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

By analyzing existing cross correlation between Guobo Electronics Co and Jilin Jlu Communication, you can compare the effects of market volatilities on Guobo Electronics and Jilin Jlu 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 Guobo Electronics with a short position of Jilin Jlu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guobo Electronics and Jilin Jlu.

Diversification Opportunities for Guobo Electronics and Jilin Jlu

0.48

Correlation Coefficient

Guobo Electronics  Jilin Jlu

Very weak diversification

The 3 months correlation between Guobo and Jilin is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Guobo Electronics Co and Jilin Jlu Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jilin Jlu Communication and Guobo Electronics 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 Guobo Electronics Co are associated (or correlated) with Jilin Jlu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jilin Jlu Communication has no effect on the direction of Guobo Electronics i.e., Guobo Electronics and Jilin Jlu go up and down completely randomly.

Pair Corralation between Guobo Electronics and Jilin Jlu

Assuming the 90 days trading horizon Guobo Electronics Co is expected to under-perform the Jilin Jlu. But the stock apears to be less risky and, when comparing its historical volatility, Guobo Electronics Co is 1.11 times less risky than Jilin Jlu. The stock trades about -0.01 of its potential returns per unit of risk. The Jilin Jlu Communication is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  780.00  in Jilin Jlu Communication on October 4, 2024 and sell it today you would earn a total of  77.00  from holding Jilin Jlu Communication or generate 9.87% return on investment over 90 days.

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

Guobo Electronics Co  vs.  Jilin Jlu Communication

Guobo Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guobo Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Jilin Jlu Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jilin Jlu Communication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Guobo Electronics and Jilin Jlu

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

The idea behind Guobo Electronics Co and Jilin Jlu Communication 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..