Correlation Between Constellation Brands and Jiangsu Expressway

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

By analyzing existing cross correlation between Constellation Brands Class and Jiangsu Expressway Co, you can compare the effects of market volatilities on Constellation Brands and Jiangsu Expressway 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 Constellation Brands with a short position of Jiangsu Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Jiangsu Expressway.

Diversification Opportunities for Constellation Brands and Jiangsu Expressway

-0.52

Correlation Coefficient

Constellation Brands  Jiangsu Expressway

Excellent diversification

The 3 months correlation between Constellation and Jiangsu is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Jiangsu Expressway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Expressway and Constellation Brands 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 Constellation Brands Class are associated (or correlated) with Jiangsu Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Expressway has no effect on the direction of Constellation Brands i.e., Constellation Brands and Jiangsu Expressway go up and down completely randomly.

Pair Corralation between Constellation Brands and Jiangsu Expressway

Considering the 90-day investment horizon Constellation Brands is expected to generate 16.27 times less return on investment than Jiangsu Expressway. But when comparing it to its historical volatility, Constellation Brands Class is 4.03 times less risky than Jiangsu Expressway. It trades about 0.01 of its potential returns per unit of risk. Jiangsu Expressway Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,655  in Jiangsu Expressway Co on October 4, 2024 and sell it today you would earn a total of  595.00  from holding Jiangsu Expressway Co or generate 35.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Constellation Brands Class  vs.  Jiangsu Expressway Co

Constellation Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Constellation Brands Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Jiangsu Expressway

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Expressway Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Jiangsu Expressway may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Constellation Brands and Jiangsu Expressway

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

The idea behind Constellation Brands Class and Jiangsu Expressway 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.

Check out your portfolio center.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.