Correlation Between China Railway and JNS Holdings

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

By analyzing existing cross correlation between China Railway Group and JNS Holdings Corp, you can compare the effects of market volatilities on China Railway and JNS Holdings 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 Railway with a short position of JNS Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and JNS Holdings.

Diversification Opportunities for China Railway and JNS Holdings

-0.43

Correlation Coefficient

China Railway  JNS Holdings

Very good diversification

The 3 months correlation between China and JNS is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Group and JNS Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JNS Holdings Corp and China Railway 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 Railway Group are associated (or correlated) with JNS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JNS Holdings Corp has no effect on the direction of China Railway i.e., China Railway and JNS Holdings go up and down completely randomly.

Pair Corralation between China Railway and JNS Holdings

Assuming the 90 days horizon China Railway Group is expected to generate 0.31 times more return on investment than JNS Holdings. However, China Railway Group is 3.25 times less risky than JNS Holdings. It trades about 0.05 of its potential returns per unit of risk. JNS Holdings Corp is currently generating about -0.05 per unit of risk. If you would invest  50.00  in China Railway Group on December 21, 2024 and sell it today you would earn a total of  3.00  from holding China Railway Group or generate 6.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

China Railway Group  vs.  JNS Holdings Corp

China Railway Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Railway Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Railway may actually be approaching a critical reversion point that can send shares even higher in April 2025.

JNS Holdings Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days JNS Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with China Railway and JNS Holdings

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

The idea behind China Railway Group and JNS Holdings Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.