Correlation Between Jiangsu Yanghe and COL Digital

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

Diversification Opportunities for Jiangsu Yanghe and COL Digital

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Jiangsu and COL is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Yanghe Brewery and COL Digital Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COL Digital Publishing and Jiangsu Yanghe 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 Jiangsu Yanghe Brewery are associated (or correlated) with COL Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COL Digital Publishing has no effect on the direction of Jiangsu Yanghe i.e., Jiangsu Yanghe and COL Digital go up and down completely randomly.

Pair Corralation between Jiangsu Yanghe and COL Digital

Assuming the 90 days trading horizon Jiangsu Yanghe Brewery is expected to generate 0.54 times more return on investment than COL Digital. However, Jiangsu Yanghe Brewery is 1.86 times less risky than COL Digital. It trades about -0.05 of its potential returns per unit of risk. COL Digital Publishing is currently generating about -0.12 per unit of risk. If you would invest  8,721  in Jiangsu Yanghe Brewery on August 29, 2024 and sell it today you would lose (279.00) from holding Jiangsu Yanghe Brewery or give up 3.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Jiangsu Yanghe Brewery  vs.  COL Digital Publishing

 Performance 
       Timeline  
Jiangsu Yanghe Brewery 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Yanghe Brewery are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Yanghe sustained solid returns over the last few months and may actually be approaching a breakup point.
COL Digital Publishing 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in COL Digital Publishing are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, COL Digital sustained solid returns over the last few months and may actually be approaching a breakup point.

Jiangsu Yanghe and COL Digital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jiangsu Yanghe and COL Digital

The main advantage of trading using opposite Jiangsu Yanghe and COL Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiangsu Yanghe position performs unexpectedly, COL Digital 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 COL Digital will offset losses from the drop in COL Digital's long position.
The idea behind Jiangsu Yanghe Brewery and COL Digital Publishing 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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