Correlation Between China Aircraft and JIN MEDICAL

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

By analyzing existing cross correlation between China Aircraft Leasing and JIN MEDICAL INTERNATIONAL, you can compare the effects of market volatilities on China Aircraft and JIN MEDICAL 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 China Aircraft with a short position of JIN MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Aircraft and JIN MEDICAL.

Diversification Opportunities for China Aircraft and JIN MEDICAL

0.06

Correlation Coefficient

China Aircraft  JIN MEDICAL

Significant diversification

The 3 months correlation between China and JIN is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding China Aircraft Leasing and JIN MEDICAL INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JIN MEDICAL INTERNATIONAL and China Aircraft 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 China Aircraft Leasing are associated (or correlated) with JIN MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JIN MEDICAL INTERNATIONAL has no effect on the direction of China Aircraft i.e., China Aircraft and JIN MEDICAL go up and down completely randomly.

Pair Corralation between China Aircraft and JIN MEDICAL

Assuming the 90 days horizon China Aircraft Leasing is expected to generate 0.51 times more return on investment than JIN MEDICAL. However, China Aircraft Leasing is 1.95 times less risky than JIN MEDICAL. It trades about 0.12 of its potential returns per unit of risk. JIN MEDICAL INTERNATIONAL is currently generating about -0.16 per unit of risk. If you would invest  30.00  in China Aircraft Leasing on September 4, 2024 and sell it today you would earn a total of  10.00  from holding China Aircraft Leasing or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

China Aircraft Leasing  vs.  JIN MEDICAL INTERNATIONAL

China Aircraft Leasing

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Aircraft Leasing are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting essential indicators, China Aircraft reported solid returns over the last few months and may actually be approaching a breakup point.

JIN MEDICAL INTERNATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JIN MEDICAL INTERNATIONAL 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 quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with China Aircraft and JIN MEDICAL

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

The idea behind China Aircraft Leasing and JIN MEDICAL INTERNATIONAL 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.