Correlation Between Shanghai Jin and Biwin Storage

Can any of the company-specific risk be diversified away by investing in both Shanghai Jin and Biwin Storage 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 Shanghai Jin and Biwin Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shanghai Jin Jiang and Biwin Storage Technology, you can compare the effects of market volatilities on Shanghai Jin and Biwin Storage 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 Shanghai Jin with a short position of Biwin Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Jin and Biwin Storage.

Diversification Opportunities for Shanghai Jin and Biwin Storage

0.18

Correlation Coefficient

Shanghai Jin  Biwin Storage

Average diversification

The 3 months correlation between Shanghai and Biwin is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Jin Jiang and Biwin Storage Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biwin Storage Technology and Shanghai Jin 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 Shanghai Jin Jiang are associated (or correlated) with Biwin Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biwin Storage Technology has no effect on the direction of Shanghai Jin i.e., Shanghai Jin and Biwin Storage go up and down completely randomly.

Pair Corralation between Shanghai Jin and Biwin Storage

Assuming the 90 days trading horizon Shanghai Jin Jiang is expected to generate 0.28 times more return on investment than Biwin Storage. However, Shanghai Jin Jiang is 3.64 times less risky than Biwin Storage. It trades about -0.09 of its potential returns per unit of risk. Biwin Storage Technology is currently generating about -0.05 per unit of risk. If you would invest  156.00  in Shanghai Jin Jiang on October 8, 2024 and sell it today you would lose (6.00) from holding Shanghai Jin Jiang or give up 3.85% of portfolio value over 90 days.

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

Shanghai Jin Jiang  vs.  Biwin Storage Technology

Shanghai Jin Jiang

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanghai Jin Jiang has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Biwin Storage Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biwin Storage Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shanghai Jin and Biwin Storage

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

The idea behind Shanghai Jin Jiang and Biwin Storage Technology 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.