Correlation Between Great Wall and Jia Jie
Can any of the company-specific risk be diversified away by investing in both Great Wall and Jia Jie 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 Great Wall and Jia Jie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Wall Enterprise and Jia Jie Biomedical, you can compare the effects of market volatilities on Great Wall and Jia Jie 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 Great Wall with a short position of Jia Jie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Jia Jie.
Diversification Opportunities for Great Wall and Jia Jie
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Great and Jia is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Jia Jie Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jia Jie Biomedical and Great Wall 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 Great Wall Enterprise are associated (or correlated) with Jia Jie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jia Jie Biomedical has no effect on the direction of Great Wall i.e., Great Wall and Jia Jie go up and down completely randomly.
Pair Corralation between Great Wall and Jia Jie
Assuming the 90 days trading horizon Great Wall is expected to generate 1.27 times less return on investment than Jia Jie. But when comparing it to its historical volatility, Great Wall Enterprise is 4.47 times less risky than Jia Jie. It trades about 0.67 of its potential returns per unit of risk. Jia Jie Biomedical is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,045 in Jia Jie Biomedical on November 27, 2024 and sell it today you would earn a total of 180.00 from holding Jia Jie Biomedical or generate 8.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Enterprise vs. Jia Jie Biomedical
Performance |
| Timeline |
| Great Wall Enterprise |
| Jia Jie Biomedical |
Great Wall and Jia Jie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Jia Jie
The main advantage of trading using opposite Great Wall and Jia Jie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Jia Jie 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 Jia Jie will offset losses from the drop in Jia Jie's long position.| Great Wall vs. Charoen Pokphand Enterprise | Great Wall vs. Uni President Enterprises Corp | Great Wall vs. Lien Hwa Industrial | Great Wall vs. Standard Foods Corp |
| Jia Jie vs. Taiwan Steel Union | Jia Jie vs. DingZing Advanced Materials | Jia Jie vs. CKM Building Material | Jia Jie vs. Yieh United Steel |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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