Correlation Between Jahen Household and Guangdong Electric

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

Diversification Opportunities for Jahen Household and Guangdong Electric

JahenGuangdongDiversified AwayJahenGuangdongDiversified Away100%
0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Jahen and Guangdong is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Jahen Household Products and Guangdong Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Electric Power and Jahen Household 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 Jahen Household Products are associated (or correlated) with Guangdong Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Electric Power has no effect on the direction of Jahen Household i.e., Jahen Household and Guangdong Electric go up and down completely randomly.

Pair Corralation between Jahen Household and Guangdong Electric

Assuming the 90 days trading horizon Jahen Household Products is expected to generate 4.45 times more return on investment than Guangdong Electric. However, Jahen Household is 4.45 times more volatile than Guangdong Electric Power. It trades about 0.1 of its potential returns per unit of risk. Guangdong Electric Power is currently generating about 0.03 per unit of risk. If you would invest  1,184  in Jahen Household Products on November 23, 2024 and sell it today you would earn a total of  419.00  from holding Jahen Household Products or generate 35.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy98.97%
ValuesDaily Returns

Jahen Household Products  vs.  Guangdong Electric Power

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -1001020
JavaScript chart by amCharts 3.21.15300955 200539
       Timeline  
Jahen Household Products 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Jahen Household Products are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jahen Household may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb131415161718192021
Guangdong Electric Power 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Guangdong Electric Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Guangdong Electric is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1.961.9822.022.042.062.08

Jahen Household and Guangdong Electric Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-12.74-9.54-6.34-3.150.03.176.389.612.82 0.20.40.60.81.01.2
JavaScript chart by amCharts 3.21.15300955 200539
       Returns  

Pair Trading with Jahen Household and Guangdong Electric

The main advantage of trading using opposite Jahen Household and Guangdong Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jahen Household position performs unexpectedly, Guangdong Electric 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 Guangdong Electric will offset losses from the drop in Guangdong Electric's long position.
The idea behind Jahen Household Products and Guangdong Electric Power 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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