Correlation Between Jiangsu Expressway and Sonos

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

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

Diversification Opportunities for Jiangsu Expressway and Sonos

0.19

Correlation Coefficient

Jiangsu Expressway  Sonos

Average diversification

The 3 months correlation between Jiangsu and Sonos is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Expressway and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc and Jiangsu Expressway 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 Jiangsu Expressway are associated (or correlated) with Sonos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonos Inc has no effect on the direction of Jiangsu Expressway i.e., Jiangsu Expressway and Sonos go up and down completely randomly.

Pair Corralation between Jiangsu Expressway and Sonos

Assuming the 90 days horizon Jiangsu Expressway is expected to generate 2.13 times less return on investment than Sonos. In addition to that, Jiangsu Expressway is 1.04 times more volatile than Sonos Inc. It trades about 0.03 of its total potential returns per unit of risk. Sonos Inc is currently generating about 0.07 per unit of volatility. If you would invest  1,306  in Sonos Inc on October 26, 2024 and sell it today you would earn a total of  104.00  from holding Sonos Inc or generate 7.96% return on investment over 90 days.

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

Jiangsu Expressway  vs.  Sonos Inc

Jiangsu Expressway

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Expressway are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Jiangsu Expressway is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sonos Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sonos Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Sonos may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Jiangsu Expressway and Sonos

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

The idea behind Jiangsu Expressway and Sonos Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.