Correlation Between JinkoSolar Holding and Encavis AG

Can any of the company-specific risk be diversified away by investing in both JinkoSolar Holding and Encavis AG 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 Encavis AG 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 Encavis AG, you can compare the effects of market volatilities on JinkoSolar Holding and Encavis AG 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 Encavis AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of JinkoSolar Holding and Encavis AG.

Diversification Opportunities for JinkoSolar Holding and Encavis AG

0.3

Correlation Coefficient

JinkoSolar Holding  Encavis AG

Weak diversification

The 3 months correlation between JinkoSolar and Encavis is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding JinkoSolar Holding Co and Encavis AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encavis AG 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 Encavis AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encavis AG has no effect on the direction of JinkoSolar Holding i.e., JinkoSolar Holding and Encavis AG go up and down completely randomly.

Pair Corralation between JinkoSolar Holding and Encavis AG

Assuming the 90 days trading horizon JinkoSolar Holding Co is expected to generate 18.54 times more return on investment than Encavis AG. However, JinkoSolar Holding is 18.54 times more volatile than Encavis AG. It trades about 0.14 of its potential returns per unit of risk. Encavis AG is currently generating about 0.09 per unit of risk. If you would invest  1,724  in JinkoSolar Holding Co on September 12, 2024 and sell it today you would earn a total of  1,026  from holding JinkoSolar Holding Co or generate 59.51% return on investment over 90 days.

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

JinkoSolar Holding Co  vs.  Encavis AG

JinkoSolar Holding

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JinkoSolar Holding Co are ranked lower than 11 (%) 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.

Encavis AG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Encavis AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Encavis AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JinkoSolar Holding and Encavis AG

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

The idea behind JinkoSolar Holding Co and Encavis AG 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.