Correlation Between JinkoSolar Holding and First Trust

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

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

Diversification Opportunities for JinkoSolar Holding and First Trust

0.08

Correlation Coefficient

JinkoSolar Holding  First Trust

Significant diversification

The 3 months correlation between JinkoSolar and First is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding JinkoSolar Holding and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Exchange has no effect on the direction of JinkoSolar Holding i.e., JinkoSolar Holding and First Trust go up and down completely randomly.

Pair Corralation between JinkoSolar Holding and First Trust

Considering the 90-day investment horizon JinkoSolar Holding is expected to generate 10.79 times more return on investment than First Trust. However, JinkoSolar Holding is 10.79 times more volatile than First Trust Exchange Traded. It trades about 0.02 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.06 per unit of risk. If you would invest  2,134  in JinkoSolar Holding on October 22, 2024 and sell it today you would lose (10.00) from holding JinkoSolar Holding or give up 0.47% of portfolio value over 90 days.

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

JinkoSolar Holding  vs.  First Trust Exchange Traded

JinkoSolar Holding

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JinkoSolar Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, JinkoSolar Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

First Trust Exchange

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Exchange Traded are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, First Trust is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JinkoSolar Holding and First Trust

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

The idea behind JinkoSolar Holding and First Trust Exchange Traded 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.