Correlation Between Jinan Acetate and Information Technology

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

Diversification Opportunities for Jinan Acetate and Information Technology

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between Jinan and Information is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Jinan Acetate Chemical and Information Technology Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Technology and Jinan Acetate 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 Jinan Acetate Chemical are associated (or correlated) with Information Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Technology has no effect on the direction of Jinan Acetate i.e., Jinan Acetate and Information Technology go up and down completely randomly.

Pair Corralation between Jinan Acetate and Information Technology

Assuming the 90 days trading horizon Jinan Acetate Chemical is expected to generate 0.75 times more return on investment than Information Technology. However, Jinan Acetate Chemical is 1.33 times less risky than Information Technology. It trades about 0.08 of its potential returns per unit of risk. Information Technology Total is currently generating about -0.25 per unit of risk. If you would invest  84,200  in Jinan Acetate Chemical on August 30, 2024 and sell it today you would earn a total of  2,200  from holding Jinan Acetate Chemical or generate 2.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Jinan Acetate Chemical  vs.  Information Technology Total

 Performance 
       Timeline  
Jinan Acetate Chemical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Jinan Acetate Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Jinan Acetate is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Information Technology 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Information Technology Total are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Information Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Jinan Acetate and Information Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jinan Acetate and Information Technology

The main advantage of trading using opposite Jinan Acetate and Information Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jinan Acetate position performs unexpectedly, Information Technology 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 Information Technology will offset losses from the drop in Information Technology's long position.
The idea behind Jinan Acetate Chemical and Information Technology Total 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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