Correlation Between Nasdaq and JA Solar

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

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

Diversification Opportunities for Nasdaq and JA Solar

0.04

Correlation Coefficient

Nasdaq  JA Solar

Significant diversification

The 3 months correlation between Nasdaq and 002459 is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and JA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JA Solar Technology and Nasdaq 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 Nasdaq Inc are associated (or correlated) with JA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JA Solar Technology has no effect on the direction of Nasdaq i.e., Nasdaq and JA Solar go up and down completely randomly.

Pair Corralation between Nasdaq and JA Solar

Given the investment horizon of 90 days Nasdaq is expected to generate 17.86 times less return on investment than JA Solar. But when comparing it to its historical volatility, Nasdaq Inc is 2.34 times less risky than JA Solar. It trades about 0.01 of its potential returns per unit of risk. JA Solar Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,251  in JA Solar Technology on December 5, 2024 and sell it today you would earn a total of  37.00  from holding JA Solar Technology or generate 2.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Nasdaq Inc  vs.  JA Solar Technology

Nasdaq Inc

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

JA Solar Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days JA Solar Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Nasdaq and JA Solar

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

The idea behind Nasdaq Inc and JA Solar Technology 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.