Correlation Between Jiangsu GDK and Jiangxi Naipu
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By analyzing existing cross correlation between Jiangsu GDK Biotechnology and Jiangxi Naipu Mining, you can compare the effects of market volatilities on Jiangsu GDK and Jiangxi Naipu 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 Jiangsu GDK with a short position of Jiangxi Naipu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu GDK and Jiangxi Naipu.
Diversification Opportunities for Jiangsu GDK and Jiangxi Naipu
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jiangsu and Jiangxi is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu GDK Biotechnology and Jiangxi Naipu Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangxi Naipu Mining and Jiangsu GDK 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 Jiangsu GDK Biotechnology are associated (or correlated) with Jiangxi Naipu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangxi Naipu Mining has no effect on the direction of Jiangsu GDK i.e., Jiangsu GDK and Jiangxi Naipu go up and down completely randomly.
Pair Corralation between Jiangsu GDK and Jiangxi Naipu
Assuming the 90 days trading horizon Jiangsu GDK Biotechnology is expected to under-perform the Jiangxi Naipu. In addition to that, Jiangsu GDK is 1.51 times more volatile than Jiangxi Naipu Mining. It trades about -0.05 of its total potential returns per unit of risk. Jiangxi Naipu Mining is currently generating about -0.04 per unit of volatility. If you would invest 2,620 in Jiangxi Naipu Mining on November 7, 2024 and sell it today you would lose (33.00) from holding Jiangxi Naipu Mining or give up 1.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jiangsu GDK Biotechnology vs. Jiangxi Naipu Mining
Performance |
| Timeline |
| Jiangsu GDK Biotechnology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Jiangxi Naipu Mining |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Jiangsu GDK and Jiangxi Naipu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jiangsu GDK and Jiangxi Naipu
The main advantage of trading using opposite Jiangsu GDK and Jiangxi Naipu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiangsu GDK position performs unexpectedly, Jiangxi Naipu 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 Jiangxi Naipu will offset losses from the drop in Jiangxi Naipu's long position.The idea behind Jiangsu GDK Biotechnology and Jiangxi Naipu Mining 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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