Correlation Between Xiamen Jihong and Sinosteel Engineering

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

Diversification Opportunities for Xiamen Jihong and Sinosteel Engineering

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Xiamen and Sinosteel is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Xiamen Jihong Package and Sinosteel Engineering and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinosteel Engineering and and Xiamen Jihong 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 Xiamen Jihong Package are associated (or correlated) with Sinosteel Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinosteel Engineering and has no effect on the direction of Xiamen Jihong i.e., Xiamen Jihong and Sinosteel Engineering go up and down completely randomly.

Pair Corralation between Xiamen Jihong and Sinosteel Engineering

Assuming the 90 days trading horizon Xiamen Jihong is expected to generate 1.38 times less return on investment than Sinosteel Engineering. In addition to that, Xiamen Jihong is 1.23 times more volatile than Sinosteel Engineering and. It trades about 0.02 of its total potential returns per unit of risk. Sinosteel Engineering and is currently generating about 0.03 per unit of volatility. If you would invest  571.00  in Sinosteel Engineering and on September 10, 2024 and sell it today you would earn a total of  125.00  from holding Sinosteel Engineering and or generate 21.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Xiamen Jihong Package  vs.  Sinosteel Engineering and

 Performance 
       Timeline  
Xiamen Jihong Package 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Xiamen Jihong Package are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiamen Jihong sustained solid returns over the last few months and may actually be approaching a breakup point.
Sinosteel Engineering and 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Sinosteel Engineering and are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinosteel Engineering sustained solid returns over the last few months and may actually be approaching a breakup point.

Xiamen Jihong and Sinosteel Engineering Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xiamen Jihong and Sinosteel Engineering

The main advantage of trading using opposite Xiamen Jihong and Sinosteel Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xiamen Jihong position performs unexpectedly, Sinosteel Engineering 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 Sinosteel Engineering will offset losses from the drop in Sinosteel Engineering's long position.
The idea behind Xiamen Jihong Package and Sinosteel Engineering and 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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