Correlation Between JinkoSolar Holding and Advanced Lithium

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

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

Diversification Opportunities for JinkoSolar Holding and Advanced Lithium

0.27

Correlation Coefficient

JinkoSolar Holding  Advanced Lithium

Modest diversification

The 3 months correlation between JinkoSolar and Advanced is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding JinkoSolar Holding and Advanced Lithium Electrochemis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Lithium Ele and JinkoSolar Holding 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 JinkoSolar Holding are associated (or correlated) with Advanced Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Lithium Ele has no effect on the direction of JinkoSolar Holding i.e., JinkoSolar Holding and Advanced Lithium go up and down completely randomly.

Pair Corralation between JinkoSolar Holding and Advanced Lithium

Considering the 90-day investment horizon JinkoSolar Holding is expected to generate 1.78 times less return on investment than Advanced Lithium. In addition to that, JinkoSolar Holding is 1.24 times more volatile than Advanced Lithium Electrochemistry. It trades about 0.04 of its total potential returns per unit of risk. Advanced Lithium Electrochemistry is currently generating about 0.08 per unit of volatility. If you would invest  3,260  in Advanced Lithium Electrochemistry on October 20, 2024 and sell it today you would earn a total of  635.00  from holding Advanced Lithium Electrochemistry or generate 19.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

JinkoSolar Holding  vs.  Advanced Lithium Electrochemis

JinkoSolar Holding

Risk-Adjusted Performance

3 of 100

Insignificant

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

Advanced Lithium Ele

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Lithium Electrochemistry are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Advanced Lithium showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JinkoSolar Holding and Advanced Lithium

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

The idea behind JinkoSolar Holding and Advanced Lithium Electrochemistry 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.