Correlation Between Jiangsu GDK and Metro Investment

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Can any of the company-specific risk be diversified away by investing in both Jiangsu GDK and Metro Investment 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 Jiangsu GDK and Metro Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jiangsu GDK Biotechnology and Metro Investment Development, you can compare the effects of market volatilities on Jiangsu GDK and Metro Investment 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 Metro Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu GDK and Metro Investment.

Diversification Opportunities for Jiangsu GDK and Metro Investment

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Jiangsu and Metro is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu GDK Biotechnology and Metro Investment Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Investment Dev 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 Metro Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Investment Dev has no effect on the direction of Jiangsu GDK i.e., Jiangsu GDK and Metro Investment go up and down completely randomly.

Pair Corralation between Jiangsu GDK and Metro Investment

Assuming the 90 days trading horizon Jiangsu GDK Biotechnology is expected to under-perform the Metro Investment. In addition to that, Jiangsu GDK is 1.21 times more volatile than Metro Investment Development. It trades about -0.02 of its total potential returns per unit of risk. Metro Investment Development is currently generating about 0.07 per unit of volatility. If you would invest  381.00  in Metro Investment Development on December 1, 2024 and sell it today you would earn a total of  8.00  from holding Metro Investment Development or generate 2.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Jiangsu GDK Biotechnology  vs.  Metro Investment Development

 Performance 
       Timeline  
Jiangsu GDK Biotechnology 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Jiangsu GDK Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Metro Investment Dev 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Metro Investment Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Jiangsu GDK and Metro Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jiangsu GDK and Metro Investment

The main advantage of trading using opposite Jiangsu GDK and Metro Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiangsu GDK position performs unexpectedly, Metro Investment 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 Metro Investment will offset losses from the drop in Metro Investment's long position.
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The idea behind Jiangsu GDK Biotechnology and Metro Investment Development 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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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 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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