Correlation Between Jinli Group and Victory New

Can any of the company-specific risk be diversified away by investing in both Jinli Group and Victory New 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 Jinli Group and Victory New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jinli Group Holdings and Victory New Materials, you can compare the effects of market volatilities on Jinli Group and Victory New 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 Jinli Group with a short position of Victory New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinli Group and Victory New.

Diversification Opportunities for Jinli Group and Victory New

-0.11

Correlation Coefficient

Jinli Group  Victory New

Good diversification

The 3 months correlation between Jinli and Victory is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Jinli Group Holdings and Victory New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory New Materials and Jinli Group 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 Jinli Group Holdings are associated (or correlated) with Victory New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory New Materials has no effect on the direction of Jinli Group i.e., Jinli Group and Victory New go up and down completely randomly.

Pair Corralation between Jinli Group and Victory New

Assuming the 90 days trading horizon Jinli Group Holdings is expected to generate 2.13 times more return on investment than Victory New. However, Jinli Group is 2.13 times more volatile than Victory New Materials. It trades about 0.15 of its potential returns per unit of risk. Victory New Materials is currently generating about -0.02 per unit of risk. If you would invest  941.00  in Jinli Group Holdings on September 16, 2024 and sell it today you would earn a total of  299.00  from holding Jinli Group Holdings or generate 31.77% return on investment over 90 days.

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

Jinli Group Holdings  vs.  Victory New Materials

Jinli Group Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jinli Group Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Jinli Group showed solid returns over the last few months and may actually be approaching a breakup point.

Victory New Materials

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jinli Group and Victory New

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

The idea behind Jinli Group Holdings and Victory New Materials 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 CEOs Directory module to screen CEOs from public companies around the world.