Correlation Between Shanghai Jinfeng and Montage Technology

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

Diversification Opportunities for Shanghai Jinfeng and Montage Technology

ShanghaiMontageDiversified AwayShanghaiMontageDiversified Away100%
-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between Shanghai and Montage is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Jinfeng Wine and Montage Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montage Technology and Shanghai Jinfeng 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 Shanghai Jinfeng Wine are associated (or correlated) with Montage Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montage Technology has no effect on the direction of Shanghai Jinfeng i.e., Shanghai Jinfeng and Montage Technology go up and down completely randomly.

Pair Corralation between Shanghai Jinfeng and Montage Technology

Assuming the 90 days trading horizon Shanghai Jinfeng Wine is expected to under-perform the Montage Technology. But the stock apears to be less risky and, when comparing its historical volatility, Shanghai Jinfeng Wine is 1.76 times less risky than Montage Technology. The stock trades about -0.02 of its potential returns per unit of risk. The Montage Technology Co is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  6,804  in Montage Technology Co on November 27, 2024 and sell it today you would earn a total of  1,180  from holding Montage Technology Co or generate 17.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Shanghai Jinfeng Wine  vs.  Montage Technology Co

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -100102030
JavaScript chart by amCharts 3.21.15600616 688008
       Timeline  
Shanghai Jinfeng Wine 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Shanghai Jinfeng Wine has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb55.566.577.58
Montage Technology 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Montage Technology Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Montage Technology sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb65707580

Shanghai Jinfeng and Montage Technology Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.16-3.87-2.57-1.270.01.282.563.845.12 0.0320.0340.0360.0380.0400.0420.044
JavaScript chart by amCharts 3.21.15600616 688008
       Returns  

Pair Trading with Shanghai Jinfeng and Montage Technology

The main advantage of trading using opposite Shanghai Jinfeng and Montage Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Jinfeng position performs unexpectedly, Montage 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 Montage Technology will offset losses from the drop in Montage Technology's long position.
The idea behind Shanghai Jinfeng Wine and Montage Technology Co 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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