Correlation Between Rock Tech and JinkoSolar Holding

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

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

Diversification Opportunities for Rock Tech and JinkoSolar Holding

-0.22

Correlation Coefficient

Rock Tech  JinkoSolar Holding

Very good diversification

The 3 months correlation between Rock and JinkoSolar is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Rock Tech Lithium and JinkoSolar Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JinkoSolar Holding and Rock Tech 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 Rock Tech Lithium are associated (or correlated) with JinkoSolar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JinkoSolar Holding has no effect on the direction of Rock Tech i.e., Rock Tech and JinkoSolar Holding go up and down completely randomly.

Pair Corralation between Rock Tech and JinkoSolar Holding

Assuming the 90 days trading horizon Rock Tech Lithium is expected to under-perform the JinkoSolar Holding. In addition to that, Rock Tech is 1.12 times more volatile than JinkoSolar Holding Co. It trades about -0.25 of its total potential returns per unit of risk. JinkoSolar Holding Co is currently generating about 0.25 per unit of volatility. If you would invest  2,000  in JinkoSolar Holding Co on September 18, 2024 and sell it today you would earn a total of  515.00  from holding JinkoSolar Holding Co or generate 25.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Rock Tech Lithium  vs.  JinkoSolar Holding Co

Rock Tech Lithium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rock Tech Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

JinkoSolar Holding

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JinkoSolar Holding Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, JinkoSolar Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rock Tech and JinkoSolar Holding

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

The idea behind Rock Tech Lithium and JinkoSolar Holding Co 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.