Correlation Between Victory New and Jinli Group
Can any of the company-specific risk be diversified away by investing in both Victory New and Jinli Group 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 Victory New and Jinli Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victory New Materials and Jinli Group Holdings, you can compare the effects of market volatilities on Victory New and Jinli Group 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 Victory New with a short position of Jinli Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory New and Jinli Group.
Diversification Opportunities for Victory New and Jinli Group
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Victory and Jinli is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Victory New Materials and Jinli Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinli Group Holdings and Victory New 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 Victory New Materials are associated (or correlated) with Jinli Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinli Group Holdings has no effect on the direction of Victory New i.e., Victory New and Jinli Group go up and down completely randomly.
Pair Corralation between Victory New and Jinli Group
Assuming the 90 days trading horizon Victory New Materials is expected to under-perform the Jinli Group. But the stock apears to be less risky and, when comparing its historical volatility, Victory New Materials is 1.27 times less risky than Jinli Group. The stock trades about -0.03 of its potential returns per unit of risk. The Jinli Group Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,060 in Jinli Group Holdings on November 2, 2024 and sell it today you would lose (50.00) from holding Jinli Group Holdings or give up 4.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Victory New Materials vs. Jinli Group Holdings
Performance |
| Timeline |
| Victory New Materials |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Jinli Group Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Victory New and Jinli Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victory New and Jinli Group
The main advantage of trading using opposite Victory New and Jinli Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory New position performs unexpectedly, Jinli Group 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 Jinli Group will offset losses from the drop in Jinli Group's long position.The idea behind Victory New Materials and Jinli Group Holdings 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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