Correlation Between Zhejiang JIULI and Gan Yuan

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

Diversification Opportunities for Zhejiang JIULI and Gan Yuan

ZhejiangGanDiversified AwayZhejiangGanDiversified Away100%
-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between Zhejiang and Gan is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang JIULI Hi tech and Gan Yuan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gan Yuan Foods and Zhejiang JIULI 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 Zhejiang JIULI Hi tech are associated (or correlated) with Gan Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gan Yuan Foods has no effect on the direction of Zhejiang JIULI i.e., Zhejiang JIULI and Gan Yuan go up and down completely randomly.

Pair Corralation between Zhejiang JIULI and Gan Yuan

Assuming the 90 days trading horizon Zhejiang JIULI Hi tech is expected to generate 0.37 times more return on investment than Gan Yuan. However, Zhejiang JIULI Hi tech is 2.72 times less risky than Gan Yuan. It trades about 0.06 of its potential returns per unit of risk. Gan Yuan Foods is currently generating about -0.13 per unit of risk. If you would invest  2,344  in Zhejiang JIULI Hi tech on November 20, 2024 and sell it today you would earn a total of  51.00  from holding Zhejiang JIULI Hi tech or generate 2.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Zhejiang JIULI Hi tech  vs.  Gan Yuan Foods

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 0510152025
JavaScript chart by amCharts 3.21.15002318 002991
       Timeline  
Zhejiang JIULI Hi 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang JIULI Hi tech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zhejiang JIULI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2222.52323.52424.52525.526
Gan Yuan Foods 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Gan Yuan Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Gan Yuan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7580859095

Zhejiang JIULI and Gan Yuan Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.73-3.54-2.36-1.170.01.162.373.574.775.98 0.050.100.15
JavaScript chart by amCharts 3.21.15002318 002991
       Returns  

Pair Trading with Zhejiang JIULI and Gan Yuan

The main advantage of trading using opposite Zhejiang JIULI and Gan Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhejiang JIULI position performs unexpectedly, Gan Yuan 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 Gan Yuan will offset losses from the drop in Gan Yuan's long position.
The idea behind Zhejiang JIULI Hi tech and Gan Yuan Foods 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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