Correlation Between Beam Global and JinkoSolar Holding

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

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

Diversification Opportunities for Beam Global and JinkoSolar Holding

0.01

Correlation Coefficient

Beam Global  JinkoSolar Holding

Significant diversification

The 3 months correlation between Beam and JinkoSolar is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Beam Global and JinkoSolar Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JinkoSolar Holding and Beam Global 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 Beam Global are associated (or correlated) with JinkoSolar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JinkoSolar Holding has no effect on the direction of Beam Global i.e., Beam Global and JinkoSolar Holding go up and down completely randomly.

Pair Corralation between Beam Global and JinkoSolar Holding

Given the investment horizon of 90 days Beam Global is expected to under-perform the JinkoSolar Holding. But the stock apears to be less risky and, when comparing its historical volatility, Beam Global is 1.92 times less risky than JinkoSolar Holding. The stock trades about -0.08 of its potential returns per unit of risk. The JinkoSolar Holding is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,727  in JinkoSolar Holding on September 4, 2024 and sell it today you would earn a total of  919.00  from holding JinkoSolar Holding or generate 53.21% return on investment over 90 days.

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

Beam Global  vs.  JinkoSolar Holding

Beam Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beam Global 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 very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

JinkoSolar Holding

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JinkoSolar Holding are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, JinkoSolar Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beam Global and JinkoSolar Holding

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

The idea behind Beam Global and JinkoSolar Holding 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.