Correlation Between Jinli Group and Roo Hsing

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

Diversification Opportunities for Jinli Group and Roo Hsing

0.38

Correlation Coefficient

Jinli Group  Roo Hsing

Weak diversification

The 3 months correlation between Jinli and Roo is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Jinli Group Holdings and Roo Hsing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roo Hsing 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 Roo Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roo Hsing has no effect on the direction of Jinli Group i.e., Jinli Group and Roo Hsing go up and down completely randomly.

Pair Corralation between Jinli Group and Roo Hsing

Assuming the 90 days trading horizon Jinli Group Holdings is expected to generate 1.12 times more return on investment than Roo Hsing. However, Jinli Group is 1.12 times more volatile than Roo Hsing Co. It trades about 0.07 of its potential returns per unit of risk. Roo Hsing Co is currently generating about 0.01 per unit of risk. If you would invest  1,015  in Jinli Group Holdings on September 19, 2024 and sell it today you would earn a total of  230.00  from holding Jinli Group Holdings or generate 22.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Jinli Group Holdings  vs.  Roo Hsing Co

Jinli Group Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jinli Group Holdings are ranked lower than 10 (%) 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.

Roo Hsing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roo Hsing Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Roo Hsing 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 Roo Hsing

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

The idea behind Jinli Group Holdings and Roo Hsing 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.