Correlation Between Jilin Jlu and Xinjiang Tianrun

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

Diversification Opportunities for Jilin Jlu and Xinjiang Tianrun

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Jilin and Xinjiang is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Jilin Jlu Communication and Xinjiang Tianrun Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Tianrun Dairy and Jilin Jlu 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 Jilin Jlu Communication are associated (or correlated) with Xinjiang Tianrun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Tianrun Dairy has no effect on the direction of Jilin Jlu i.e., Jilin Jlu and Xinjiang Tianrun go up and down completely randomly.

Pair Corralation between Jilin Jlu and Xinjiang Tianrun

Assuming the 90 days trading horizon Jilin Jlu Communication is expected to under-perform the Xinjiang Tianrun. In addition to that, Jilin Jlu is 1.29 times more volatile than Xinjiang Tianrun Dairy. It trades about -0.32 of its total potential returns per unit of risk. Xinjiang Tianrun Dairy is currently generating about -0.41 per unit of volatility. If you would invest  1,049  in Xinjiang Tianrun Dairy on October 15, 2024 and sell it today you would lose (209.00) from holding Xinjiang Tianrun Dairy or give up 19.92% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Jilin Jlu Communication  vs.  Xinjiang Tianrun Dairy

 Performance 
       Timeline  
Jilin Jlu Communication 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Jilin Jlu Communication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jilin Jlu is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Xinjiang Tianrun Dairy 

Risk-Adjusted Performance

2 of 100

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

Jilin Jlu and Xinjiang Tianrun Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jilin Jlu and Xinjiang Tianrun

The main advantage of trading using opposite Jilin Jlu and Xinjiang Tianrun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jilin Jlu position performs unexpectedly, Xinjiang Tianrun 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 Xinjiang Tianrun will offset losses from the drop in Xinjiang Tianrun's long position.
The idea behind Jilin Jlu Communication and Xinjiang Tianrun Dairy 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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