Correlation Between TreeHouse Foods and JinkoSolar Holding

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

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

Diversification Opportunities for TreeHouse Foods and JinkoSolar Holding

-0.25

Correlation Coefficient

TreeHouse Foods  JinkoSolar Holding

Very good diversification

The 3 months correlation between TreeHouse and JinkoSolar is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding TreeHouse Foods and JinkoSolar Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JinkoSolar Holding and TreeHouse Foods 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 TreeHouse Foods 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 TreeHouse Foods i.e., TreeHouse Foods and JinkoSolar Holding go up and down completely randomly.

Pair Corralation between TreeHouse Foods and JinkoSolar Holding

Assuming the 90 days horizon TreeHouse Foods is expected to generate 0.51 times more return on investment than JinkoSolar Holding. However, TreeHouse Foods is 1.97 times less risky than JinkoSolar Holding. It trades about -0.02 of its potential returns per unit of risk. JinkoSolar Holding Co is currently generating about -0.01 per unit of risk. If you would invest  4,580  in TreeHouse Foods on October 2, 2024 and sell it today you would lose (1,220) from holding TreeHouse Foods or give up 26.64% of portfolio value over 90 days.

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

TreeHouse Foods  vs.  JinkoSolar Holding Co

TreeHouse Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TreeHouse Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

JinkoSolar Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JinkoSolar Holding Co are ranked lower than 3 (%) 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 TreeHouse Foods and JinkoSolar Holding

The main advantage of trading using opposite TreeHouse Foods and JinkoSolar Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TreeHouse Foods 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 TreeHouse Foods 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.