Correlation Between Hisense Home and JinkoSolar Holding

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

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

Diversification Opportunities for Hisense Home and JinkoSolar Holding

0.08

Correlation Coefficient

Hisense Home  JinkoSolar Holding

Significant diversification

The 3 months correlation between Hisense and JinkoSolar is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hisense Home Appliances and JinkoSolar Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JinkoSolar Holding and Hisense Home 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 Hisense Home Appliances 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 Hisense Home i.e., Hisense Home and JinkoSolar Holding go up and down completely randomly.

Pair Corralation between Hisense Home and JinkoSolar Holding

Assuming the 90 days horizon Hisense Home Appliances is expected to generate 0.55 times more return on investment than JinkoSolar Holding. However, Hisense Home Appliances is 1.81 times less risky than JinkoSolar Holding. It trades about 0.08 of its potential returns per unit of risk. JinkoSolar Holding Co is currently generating about 0.04 per unit of risk. If you would invest  295.00  in Hisense Home Appliances on October 24, 2024 and sell it today you would earn a total of  38.00  from holding Hisense Home Appliances or generate 12.88% return on investment over 90 days.

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

Hisense Home Appliances  vs.  JinkoSolar Holding Co

Hisense Home Appliances

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hisense Home Appliances are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hisense Home reported solid returns over the last few months and may actually be approaching a breakup point.

JinkoSolar Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JinkoSolar Holding Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, JinkoSolar Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hisense Home and JinkoSolar Holding

The main advantage of trading using opposite Hisense Home and JinkoSolar Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hisense Home 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 Hisense Home Appliances and JinkoSolar Holding 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.