Correlation Between Global E and Jiangsu Expressway

Can any of the company-specific risk be diversified away by investing in both Global E and Jiangsu Expressway 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 Global E and Jiangsu Expressway into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global E Online and Jiangsu Expressway Co, you can compare the effects of market volatilities on Global E and Jiangsu Expressway 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 Global E with a short position of Jiangsu Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global E and Jiangsu Expressway.

Diversification Opportunities for Global E and Jiangsu Expressway

0.0

Correlation Coefficient

Global E  Jiangsu Expressway

Pay attention - limited upside

The 3 months correlation between Global and Jiangsu is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Jiangsu Expressway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Expressway and Global E 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 Global E Online are associated (or correlated) with Jiangsu Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Expressway has no effect on the direction of Global E i.e., Global E and Jiangsu Expressway go up and down completely randomly.

Pair Corralation between Global E and Jiangsu Expressway

Given the investment horizon of 90 days Global E Online is expected to generate 0.7 times more return on investment than Jiangsu Expressway. However, Global E Online is 1.44 times less risky than Jiangsu Expressway. It trades about 0.08 of its potential returns per unit of risk. Jiangsu Expressway Co is currently generating about 0.03 per unit of risk. If you would invest  2,075  in Global E Online on September 24, 2024 and sell it today you would earn a total of  3,403  from holding Global E Online or generate 164.0% return on investment over 90 days.

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

Global E Online  vs.  Jiangsu Expressway Co

Global E Online

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global E Online are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Global E exhibited solid returns over the last few months and may actually be approaching a breakup point.

Jiangsu Expressway

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Expressway Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Jiangsu Expressway showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global E and Jiangsu Expressway

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

The idea behind Global E Online and Jiangsu Expressway 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 Commodity Directory module to find actively traded commodities issued by global exchanges.