Correlation Between GreenTech Environmental and Jilin OLED

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

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

Diversification Opportunities for GreenTech Environmental and Jilin OLED

0.61

Correlation Coefficient

GreenTech Environmental  Jilin OLED

Poor diversification

The 3 months correlation between GreenTech and Jilin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GreenTech Environmental Co and Jilin OLED Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jilin OLED Material and GreenTech Environmental 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 GreenTech Environmental Co are associated (or correlated) with Jilin OLED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jilin OLED Material has no effect on the direction of GreenTech Environmental i.e., GreenTech Environmental and Jilin OLED go up and down completely randomly.

Pair Corralation between GreenTech Environmental and Jilin OLED

Assuming the 90 days trading horizon GreenTech Environmental is expected to generate 2.17 times less return on investment than Jilin OLED. But when comparing it to its historical volatility, GreenTech Environmental Co is 1.26 times less risky than Jilin OLED. It trades about 0.03 of its potential returns per unit of risk. Jilin OLED Material is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,884  in Jilin OLED Material on October 10, 2024 and sell it today you would earn a total of  218.00  from holding Jilin OLED Material or generate 11.57% return on investment over 90 days.

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

GreenTech Environmental Co  vs.  Jilin OLED Material

GreenTech Environmental

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GreenTech Environmental Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GreenTech Environmental may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with GreenTech Environmental and Jilin OLED

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

The idea behind GreenTech Environmental Co and Jilin OLED Material 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.