Correlation Between Jiahe Foods and Tonghua Grape
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By analyzing existing cross correlation between Jiahe Foods Industry and Tonghua Grape Wine, you can compare the effects of market volatilities on Jiahe Foods and Tonghua Grape 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 Jiahe Foods with a short position of Tonghua Grape. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiahe Foods and Tonghua Grape.
Diversification Opportunities for Jiahe Foods and Tonghua Grape
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jiahe and Tonghua is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Jiahe Foods Industry and Tonghua Grape Wine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tonghua Grape Wine and Jiahe Foods 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 Jiahe Foods Industry are associated (or correlated) with Tonghua Grape. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tonghua Grape Wine has no effect on the direction of Jiahe Foods i.e., Jiahe Foods and Tonghua Grape go up and down completely randomly.
Pair Corralation between Jiahe Foods and Tonghua Grape
Assuming the 90 days trading horizon Jiahe Foods Industry is expected to generate 1.2 times more return on investment than Tonghua Grape. However, Jiahe Foods is 1.2 times more volatile than Tonghua Grape Wine. It trades about 0.02 of its potential returns per unit of risk. Tonghua Grape Wine is currently generating about -0.01 per unit of risk. If you would invest 1,458 in Jiahe Foods Industry on September 12, 2024 and sell it today you would earn a total of 28.00 from holding Jiahe Foods Industry or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jiahe Foods Industry vs. Tonghua Grape Wine
Performance |
| Timeline |
| Jiahe Foods Industry |
| Tonghua Grape Wine |
Jiahe Foods and Tonghua Grape Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jiahe Foods and Tonghua Grape
The main advantage of trading using opposite Jiahe Foods and Tonghua Grape positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiahe Foods position performs unexpectedly, Tonghua Grape 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 Tonghua Grape will offset losses from the drop in Tonghua Grape's long position.| Jiahe Foods vs. China Petroleum Chemical | Jiahe Foods vs. PetroChina Co Ltd | Jiahe Foods vs. China State Construction | Jiahe Foods vs. China Railway Group |
| Tonghua Grape vs. China Petroleum Chemical | Tonghua Grape vs. PetroChina Co Ltd | Tonghua Grape vs. China State Construction | Tonghua Grape vs. China Railway Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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