Correlation Between China Everbright and JPMorgan Chase

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

By analyzing existing cross correlation between China Everbright Environment and JPMorgan Chase Co, you can compare the effects of market volatilities on China Everbright and JPMorgan Chase 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 Everbright with a short position of JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Everbright and JPMorgan Chase.

Diversification Opportunities for China Everbright and JPMorgan Chase

0.52

Correlation Coefficient

China Everbright  JPMorgan Chase

Very weak diversification

The 3 months correlation between China and JPMorgan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding China Everbright Environment and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and China Everbright 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 Everbright Environment are associated (or correlated) with JPMorgan Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Chase has no effect on the direction of China Everbright i.e., China Everbright and JPMorgan Chase go up and down completely randomly.

Pair Corralation between China Everbright and JPMorgan Chase

If you would invest  21,896  in JPMorgan Chase Co on October 3, 2024 and sell it today you would earn a total of  2,036  from holding JPMorgan Chase Co or generate 9.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.19%
Values	Daily Returns

China Everbright Environment  vs.  JPMorgan Chase Co

China Everbright Env

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Everbright Environment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, China Everbright is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

JPMorgan Chase

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, JPMorgan Chase displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Everbright and JPMorgan Chase

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

The idea behind China Everbright Environment and JPMorgan Chase Co 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..