Correlation Between Aris Water and Jayud Global

Can any of the company-specific risk be diversified away by investing in both Aris Water and Jayud Global 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 Aris Water and Jayud Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aris Water Solutions and Jayud Global Logistics, you can compare the effects of market volatilities on Aris Water and Jayud Global 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 Aris Water with a short position of Jayud Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aris Water and Jayud Global.

Diversification Opportunities for Aris Water and Jayud Global

0.74

Correlation Coefficient

Aris Water  Jayud Global

Poor diversification

The 3 months correlation between Aris and Jayud is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aris Water Solutions and Jayud Global Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jayud Global Logistics and Aris Water 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 Aris Water Solutions are associated (or correlated) with Jayud Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jayud Global Logistics has no effect on the direction of Aris Water i.e., Aris Water and Jayud Global go up and down completely randomly.

Pair Corralation between Aris Water and Jayud Global

Given the investment horizon of 90 days Aris Water Solutions is expected to generate 0.48 times more return on investment than Jayud Global. However, Aris Water Solutions is 2.07 times less risky than Jayud Global. It trades about 0.41 of its potential returns per unit of risk. Jayud Global Logistics is currently generating about -0.01 per unit of risk. If you would invest  1,656  in Aris Water Solutions on September 5, 2024 and sell it today you would earn a total of  1,096  from holding Aris Water Solutions or generate 66.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Aris Water Solutions  vs.  Jayud Global Logistics

Aris Water Solutions

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aris Water Solutions are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, Aris Water unveiled solid returns over the last few months and may actually be approaching a breakup point.

Jayud Global Logistics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jayud Global Logistics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Jayud Global exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aris Water and Jayud Global

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

The idea behind Aris Water Solutions and Jayud Global Logistics 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.