Correlation Between X Legend and Jinan Acetate
Can any of the company-specific risk be diversified away by investing in both X Legend and Jinan Acetate 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 X Legend and Jinan Acetate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X Legend Entertainment Co and Jinan Acetate Chemical, you can compare the effects of market volatilities on X Legend and Jinan Acetate 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 X Legend with a short position of Jinan Acetate. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Legend and Jinan Acetate.
Diversification Opportunities for X Legend and Jinan Acetate
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 4994 and Jinan is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding X Legend Entertainment Co and Jinan Acetate Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinan Acetate Chemical and X Legend 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 X Legend Entertainment Co are associated (or correlated) with Jinan Acetate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinan Acetate Chemical has no effect on the direction of X Legend i.e., X Legend and Jinan Acetate go up and down completely randomly.
Pair Corralation between X Legend and Jinan Acetate
Assuming the 90 days trading horizon X Legend is expected to generate 1.6 times less return on investment than Jinan Acetate. But when comparing it to its historical volatility, X Legend Entertainment Co is 1.06 times less risky than Jinan Acetate. It trades about 0.07 of its potential returns per unit of risk. Jinan Acetate Chemical is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 16,912 in Jinan Acetate Chemical on September 3, 2024 and sell it today you would earn a total of 71,988 from holding Jinan Acetate Chemical or generate 425.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X Legend Entertainment Co vs. Jinan Acetate Chemical
Performance |
| Timeline |
| X Legend Entertainment |
| Jinan Acetate Chemical |
X Legend and Jinan Acetate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X Legend and Jinan Acetate
The main advantage of trading using opposite X Legend and Jinan Acetate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Legend position performs unexpectedly, Jinan Acetate 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 Jinan Acetate will offset losses from the drop in Jinan Acetate's long position.| X Legend vs. China Steel Corp | X Legend vs. Formosa Plastics Corp | X Legend vs. Cathay Financial Holding | X Legend vs. Fubon Financial Holding |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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