Correlation Between Jilin Chemical and JCHX Mining

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Can any of the company-specific risk be diversified away by investing in both Jilin Chemical and JCHX Mining 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 Jilin Chemical and JCHX Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jilin Chemical Fibre and JCHX Mining Management, you can compare the effects of market volatilities on Jilin Chemical and JCHX Mining 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 Jilin Chemical with a short position of JCHX Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jilin Chemical and JCHX Mining.

Diversification Opportunities for Jilin Chemical and JCHX Mining

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Jilin and JCHX is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Jilin Chemical Fibre and JCHX Mining Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCHX Mining Management and Jilin Chemical 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 Jilin Chemical Fibre are associated (or correlated) with JCHX Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCHX Mining Management has no effect on the direction of Jilin Chemical i.e., Jilin Chemical and JCHX Mining go up and down completely randomly.

Pair Corralation between Jilin Chemical and JCHX Mining

Assuming the 90 days trading horizon Jilin Chemical is expected to generate 4.16 times less return on investment than JCHX Mining. In addition to that, Jilin Chemical is 1.2 times more volatile than JCHX Mining Management. It trades about 0.01 of its total potential returns per unit of risk. JCHX Mining Management is currently generating about 0.03 per unit of volatility. If you would invest  3,200  in JCHX Mining Management on August 29, 2024 and sell it today you would earn a total of  695.00  from holding JCHX Mining Management or generate 21.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Jilin Chemical Fibre  vs.  JCHX Mining Management

 Performance 
       Timeline  
Jilin Chemical Fibre 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Jilin Chemical Fibre are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jilin Chemical sustained solid returns over the last few months and may actually be approaching a breakup point.
JCHX Mining Management 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days JCHX Mining Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JCHX Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jilin Chemical and JCHX Mining Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jilin Chemical and JCHX Mining

The main advantage of trading using opposite Jilin Chemical and JCHX Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jilin Chemical position performs unexpectedly, JCHX Mining 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 JCHX Mining will offset losses from the drop in JCHX Mining's long position.
The idea behind Jilin Chemical Fibre and JCHX Mining Management 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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