Correlation Between Chuangs China and J+J SNACK

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

By analyzing existing cross correlation between Chuangs China Investments and JJ SNACK FOODS, you can compare the effects of market volatilities on Chuangs China and J+J SNACK 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 Chuangs China with a short position of J+J SNACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and J+J SNACK.

Diversification Opportunities for Chuangs China and J+J SNACK

-0.12

Correlation Coefficient

Chuangs China  J+J SNACK

Good diversification

The 3 months correlation between Chuangs and J+J is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and JJ SNACK FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJ SNACK FOODS and Chuangs China 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 Chuangs China Investments are associated (or correlated) with J+J SNACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJ SNACK FOODS has no effect on the direction of Chuangs China i.e., Chuangs China and J+J SNACK go up and down completely randomly.

Pair Corralation between Chuangs China and J+J SNACK

Assuming the 90 days horizon Chuangs China is expected to generate 27.11 times less return on investment than J+J SNACK. But when comparing it to its historical volatility, Chuangs China Investments is 1.01 times less risky than J+J SNACK. It trades about 0.0 of its potential returns per unit of risk. JJ SNACK FOODS is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  15,027  in JJ SNACK FOODS on September 22, 2024 and sell it today you would earn a total of  973.00  from holding JJ SNACK FOODS or generate 6.48% return on investment over 90 days.

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

Chuangs China Investments  vs.  JJ SNACK FOODS

Chuangs China Investments

Risk-Adjusted Performance

0 of 100

Very Weak

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

JJ SNACK FOODS

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JJ SNACK FOODS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, J+J SNACK may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Chuangs China and J+J SNACK

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

The idea behind Chuangs China Investments and JJ SNACK FOODS 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.