Correlation Between JinkoSolar Holding and Cars

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

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

Diversification Opportunities for JinkoSolar Holding and Cars

0.09

Correlation Coefficient

JinkoSolar Holding  Cars

Significant diversification

The 3 months correlation between JinkoSolar and Cars is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding JinkoSolar Holding Co and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc 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 Co are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of JinkoSolar Holding i.e., JinkoSolar Holding and Cars go up and down completely randomly.

Pair Corralation between JinkoSolar Holding and Cars

Assuming the 90 days trading horizon JinkoSolar Holding Co is expected to under-perform the Cars. In addition to that, JinkoSolar Holding is 1.45 times more volatile than Cars Inc. It trades about -0.01 of its total potential returns per unit of risk. Cars Inc is currently generating about 0.03 per unit of volatility. If you would invest  1,400  in Cars Inc on October 4, 2024 and sell it today you would earn a total of  240.00  from holding Cars Inc or generate 17.14% return on investment over 90 days.

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

JinkoSolar Holding Co  vs.  Cars Inc

JinkoSolar Holding

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days JinkoSolar Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, JinkoSolar Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Cars Inc

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cars Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cars reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JinkoSolar Holding and Cars

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

The idea behind JinkoSolar Holding Co and Cars Inc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.