Correlation Between Jinli Group and Tainan Enterprises

Can any of the company-specific risk be diversified away by investing in both Jinli Group and Tainan Enterprises 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 Tainan Enterprises 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 Tainan Enterprises Co, you can compare the effects of market volatilities on Jinli Group and Tainan Enterprises 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 Tainan Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinli Group and Tainan Enterprises.

Diversification Opportunities for Jinli Group and Tainan Enterprises

-0.46

Correlation Coefficient

Jinli Group  Tainan Enterprises

Very good diversification

The 3 months correlation between Jinli and Tainan is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Jinli Group Holdings and Tainan Enterprises Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tainan Enterprises 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 Tainan Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tainan Enterprises has no effect on the direction of Jinli Group i.e., Jinli Group and Tainan Enterprises go up and down completely randomly.

Pair Corralation between Jinli Group and Tainan Enterprises

Assuming the 90 days trading horizon Jinli Group Holdings is expected to generate 2.62 times more return on investment than Tainan Enterprises. However, Jinli Group is 2.62 times more volatile than Tainan Enterprises Co. It trades about 0.07 of its potential returns per unit of risk. Tainan Enterprises Co is currently generating about -0.26 per unit of risk. If you would invest  1,110  in Jinli Group Holdings on September 25, 2024 and sell it today you would earn a total of  90.00  from holding Jinli Group Holdings or generate 8.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.67%
Values	Daily Returns

Jinli Group Holdings  vs.  Tainan Enterprises Co

Jinli Group Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jinli Group Holdings are ranked lower than 7 (%) 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.

Tainan Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tainan Enterprises Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Jinli Group and Tainan Enterprises

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

The idea behind Jinli Group Holdings and Tainan Enterprises Co 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..