Correlation Between JinkoSolar Holding and Applied Digital

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

By analyzing existing cross correlation between JinkoSolar Holding and Applied Digital, you can compare the effects of market volatilities on JinkoSolar Holding and Applied Digital 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 Applied Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of JinkoSolar Holding and Applied Digital.

Diversification Opportunities for JinkoSolar Holding and Applied Digital

-0.05

Correlation Coefficient

JinkoSolar Holding  Applied Digital

Good diversification

The 3 months correlation between JinkoSolar and Applied is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding JinkoSolar Holding and Applied Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Digital 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 Applied Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Digital has no effect on the direction of JinkoSolar Holding i.e., JinkoSolar Holding and Applied Digital go up and down completely randomly.

Pair Corralation between JinkoSolar Holding and Applied Digital

Considering the 90-day investment horizon JinkoSolar Holding is expected to generate 0.57 times more return on investment than Applied Digital. However, JinkoSolar Holding is 1.75 times less risky than Applied Digital. It trades about 0.03 of its potential returns per unit of risk. Applied Digital is currently generating about -0.17 per unit of risk. If you would invest  2,599  in JinkoSolar Holding on October 6, 2024 and sell it today you would earn a total of  22.00  from holding JinkoSolar Holding or generate 0.85% return on investment over 90 days.

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

JinkoSolar Holding  vs.  Applied Digital

JinkoSolar Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JinkoSolar Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Applied Digital

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Digital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JinkoSolar Holding and Applied Digital

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

The idea behind JinkoSolar Holding and Applied Digital 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.