Correlation Between Pou Chen and Jinli Group
Can any of the company-specific risk be diversified away by investing in both Pou Chen and Jinli Group 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 Pou Chen and Jinli Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pou Chen Corp and Jinli Group Holdings, you can compare the effects of market volatilities on Pou Chen and Jinli Group 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 Pou Chen with a short position of Jinli Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pou Chen and Jinli Group.
Diversification Opportunities for Pou Chen and Jinli Group
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pou and Jinli is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pou Chen Corp and Jinli Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinli Group Holdings and Pou Chen 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 Pou Chen Corp are associated (or correlated) with Jinli Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinli Group Holdings has no effect on the direction of Pou Chen i.e., Pou Chen and Jinli Group go up and down completely randomly.
Pair Corralation between Pou Chen and Jinli Group
Assuming the 90 days trading horizon Pou Chen Corp is expected to under-perform the Jinli Group. But the stock apears to be less risky and, when comparing its historical volatility, Pou Chen Corp is 1.57 times less risky than Jinli Group. The stock trades about -0.2 of its potential returns per unit of risk. The Jinli Group Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,225 in Jinli Group Holdings on September 26, 2024 and sell it today you would lose (15.00) from holding Jinli Group Holdings or give up 1.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Pou Chen Corp vs. Jinli Group Holdings
Performance |
Timeline |
Pou Chen Corp |
Jinli Group Holdings |
Pou Chen and Jinli Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pou Chen and Jinli Group
The main advantage of trading using opposite Pou Chen and Jinli Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pou Chen position performs unexpectedly, Jinli Group 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 Jinli Group will offset losses from the drop in Jinli Group's long position.Pou Chen vs. Merida Industry Co | Pou Chen vs. Cheng Shin Rubber | Pou Chen vs. Uni President Enterprises Corp |
Jinli Group vs. Merida Industry Co | Jinli Group vs. Cheng Shin Rubber | Jinli Group vs. Uni President Enterprises Corp | Jinli Group vs. Pou Chen Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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