Correlation Between Alternative Energy and China Jo

Can any of the company-specific risk be diversified away by investing in both Alternative Energy and China Jo 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 Alternative Energy and China Jo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alternative Energy and China Jo Jo Drugstores, you can compare the effects of market volatilities on Alternative Energy and China Jo 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 Alternative Energy with a short position of China Jo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Energy and China Jo.

Diversification Opportunities for Alternative Energy and China Jo

-0.29

Correlation Coefficient

Alternative Energy  China Jo

Very good diversification

The 3 months correlation between Alternative and China is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Energy and China Jo Jo Drugstores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Jo Jo and Alternative Energy 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 Alternative Energy are associated (or correlated) with China Jo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Jo Jo has no effect on the direction of Alternative Energy i.e., Alternative Energy and China Jo go up and down completely randomly.

Pair Corralation between Alternative Energy and China Jo

Given the investment horizon of 90 days Alternative Energy is expected to under-perform the China Jo. In addition to that, Alternative Energy is 1.43 times more volatile than China Jo Jo Drugstores. It trades about -0.12 of its total potential returns per unit of risk. China Jo Jo Drugstores is currently generating about 0.08 per unit of volatility. If you would invest  165.00  in China Jo Jo Drugstores on September 3, 2024 and sell it today you would earn a total of  36.00  from holding China Jo Jo Drugstores or generate 21.82% return on investment over 90 days.

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

Alternative Energy  vs.  China Jo Jo Drugstores

Alternative Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alternative Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

China Jo Jo

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Jo Jo Drugstores are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking indicators, China Jo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alternative Energy and China Jo

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

The idea behind Alternative Energy and China Jo Jo Drugstores 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.