Correlation Between I Jang and Golden Long

Can any of the company-specific risk be diversified away by investing in both I Jang and Golden Long 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 I Jang and Golden Long into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between I Jang Industrial and Golden Long Teng, you can compare the effects of market volatilities on I Jang and Golden Long 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 I Jang with a short position of Golden Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Jang and Golden Long.

Diversification Opportunities for I Jang and Golden Long

0.44

Correlation Coefficient

I Jang  Golden Long

Very weak diversification

The 3 months correlation between 8342 and Golden is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding I Jang Industrial and Golden Long Teng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Long Teng and I Jang 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 I Jang Industrial are associated (or correlated) with Golden Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Long Teng has no effect on the direction of I Jang i.e., I Jang and Golden Long go up and down completely randomly.

Pair Corralation between I Jang and Golden Long

Assuming the 90 days trading horizon I Jang is expected to generate 1.46 times less return on investment than Golden Long. But when comparing it to its historical volatility, I Jang Industrial is 1.09 times less risky than Golden Long. It trades about 0.06 of its potential returns per unit of risk. Golden Long Teng is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,195  in Golden Long Teng on September 26, 2024 and sell it today you would earn a total of  1,605  from holding Golden Long Teng or generate 134.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

I Jang Industrial  vs.  Golden Long Teng

I Jang Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days I Jang Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, I Jang is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Golden Long Teng

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Long Teng has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with I Jang and Golden Long

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

The idea behind I Jang Industrial and Golden Long Teng 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.