Correlation Between Jinhe Biotechnology and Aurora Optoelectronics
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By analyzing existing cross correlation between Jinhe Biotechnology Co and Aurora Optoelectronics Co, you can compare the effects of market volatilities on Jinhe Biotechnology and Aurora Optoelectronics 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 Jinhe Biotechnology with a short position of Aurora Optoelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinhe Biotechnology and Aurora Optoelectronics.
Diversification Opportunities for Jinhe Biotechnology and Aurora Optoelectronics
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jinhe and Aurora is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Jinhe Biotechnology Co and Aurora Optoelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Optoelectronics and Jinhe Biotechnology 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 Jinhe Biotechnology Co are associated (or correlated) with Aurora Optoelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Optoelectronics has no effect on the direction of Jinhe Biotechnology i.e., Jinhe Biotechnology and Aurora Optoelectronics go up and down completely randomly.
Pair Corralation between Jinhe Biotechnology and Aurora Optoelectronics
Assuming the 90 days trading horizon Jinhe Biotechnology Co is expected to generate 1.13 times more return on investment than Aurora Optoelectronics. However, Jinhe Biotechnology is 1.13 times more volatile than Aurora Optoelectronics Co. It trades about 0.05 of its potential returns per unit of risk. Aurora Optoelectronics Co is currently generating about -0.06 per unit of risk. If you would invest 428.00 in Jinhe Biotechnology Co on November 7, 2024 and sell it today you would earn a total of 8.00 from holding Jinhe Biotechnology Co or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jinhe Biotechnology Co vs. Aurora Optoelectronics Co
Performance |
| Timeline |
| Jinhe Biotechnology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Aurora Optoelectronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Jinhe Biotechnology and Aurora Optoelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jinhe Biotechnology and Aurora Optoelectronics
The main advantage of trading using opposite Jinhe Biotechnology and Aurora Optoelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jinhe Biotechnology position performs unexpectedly, Aurora Optoelectronics 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 Aurora Optoelectronics will offset losses from the drop in Aurora Optoelectronics' long position.The idea behind Jinhe Biotechnology Co and Aurora Optoelectronics Co 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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