Correlation Between Jilin OLED and Biwin Storage

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

By analyzing existing cross correlation between Jilin OLED Material and Biwin Storage Technology, you can compare the effects of market volatilities on Jilin OLED and Biwin Storage 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 Jilin OLED with a short position of Biwin Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jilin OLED and Biwin Storage.

Diversification Opportunities for Jilin OLED and Biwin Storage

-0.06

Correlation Coefficient

Jilin OLED  Biwin Storage

Good diversification

The 3 months correlation between Jilin and Biwin is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Jilin OLED Material and Biwin Storage Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biwin Storage Technology and Jilin OLED 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 Jilin OLED Material are associated (or correlated) with Biwin Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biwin Storage Technology has no effect on the direction of Jilin OLED i.e., Jilin OLED and Biwin Storage go up and down completely randomly.

Pair Corralation between Jilin OLED and Biwin Storage

Assuming the 90 days trading horizon Jilin OLED is expected to generate 16.45 times less return on investment than Biwin Storage. But when comparing it to its historical volatility, Jilin OLED Material is 1.46 times less risky than Biwin Storage. It trades about 0.01 of its potential returns per unit of risk. Biwin Storage Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,405  in Biwin Storage Technology on October 10, 2024 and sell it today you would earn a total of  3,455  from holding Biwin Storage Technology or generate 143.66% return on investment over 90 days.

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

Jilin OLED Material  vs.  Biwin Storage Technology

Jilin OLED Material

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jilin OLED Material are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jilin OLED sustained solid returns over the last few months and may actually be approaching a breakup point.

Biwin Storage Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biwin Storage Technology 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 Jilin OLED and Biwin Storage

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

The idea behind Jilin OLED Material and Biwin Storage Technology 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.