Correlation Between JIN MEDICAL and Neuropace

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

By analyzing existing cross correlation between JIN MEDICAL INTERNATIONAL and Neuropace, you can compare the effects of market volatilities on JIN MEDICAL and Neuropace 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 JIN MEDICAL with a short position of Neuropace. Check out your portfolio center. Please also check ongoing floating volatility patterns of JIN MEDICAL and Neuropace.

Diversification Opportunities for JIN MEDICAL and Neuropace

-0.54

Correlation Coefficient

JIN MEDICAL  Neuropace

Excellent diversification

The 3 months correlation between JIN and Neuropace is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding JIN MEDICAL INTERNATIONAL and Neuropace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuropace and JIN MEDICAL 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 JIN MEDICAL INTERNATIONAL are associated (or correlated) with Neuropace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuropace has no effect on the direction of JIN MEDICAL i.e., JIN MEDICAL and Neuropace go up and down completely randomly.

Pair Corralation between JIN MEDICAL and Neuropace

Given the investment horizon of 90 days JIN MEDICAL INTERNATIONAL is expected to under-perform the Neuropace. In addition to that, JIN MEDICAL is 2.33 times more volatile than Neuropace. It trades about -0.02 of its total potential returns per unit of risk. Neuropace is currently generating about 0.15 per unit of volatility. If you would invest  1,025  in Neuropace on November 27, 2024 and sell it today you would earn a total of  336.50  from holding Neuropace or generate 32.83% return on investment over 90 days.

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

JIN MEDICAL INTERNATIONAL  vs.  Neuropace

JIN MEDICAL INTERNATIONAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days JIN MEDICAL INTERNATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Neuropace

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neuropace are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Neuropace exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JIN MEDICAL and Neuropace

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

The idea behind JIN MEDICAL INTERNATIONAL and Neuropace 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.