Correlation Between JinkoSolar Holding and CMC Investment

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

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

Diversification Opportunities for JinkoSolar Holding and CMC Investment

-0.23

Correlation Coefficient

JinkoSolar Holding  CMC Investment

Very good diversification

The 3 months correlation between JinkoSolar and CMC is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding JinkoSolar Holding and CMC Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMC Investment JSC 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 CMC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMC Investment JSC has no effect on the direction of JinkoSolar Holding i.e., JinkoSolar Holding and CMC Investment go up and down completely randomly.

Pair Corralation between JinkoSolar Holding and CMC Investment

Considering the 90-day investment horizon JinkoSolar Holding is expected to under-perform the CMC Investment. But the stock apears to be less risky and, when comparing its historical volatility, JinkoSolar Holding is 1.41 times less risky than CMC Investment. The stock trades about -0.01 of its potential returns per unit of risk. The CMC Investment JSC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  600,000  in CMC Investment JSC on October 21, 2024 and sell it today you would earn a total of  0.00  from holding CMC Investment JSC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.0%
Values	Daily Returns

JinkoSolar Holding  vs.  CMC Investment JSC

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.

CMC Investment JSC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CMC Investment JSC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, CMC Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JinkoSolar Holding and CMC Investment

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

The idea behind JinkoSolar Holding and CMC Investment JSC 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.