Correlation Between GOODYEAR T and JINHUI SHIPPING
Can any of the company-specific risk be diversified away by investing in both GOODYEAR T and JINHUI SHIPPING 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 GOODYEAR T and JINHUI SHIPPING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOODYEAR T RUBBER and JINHUI SHIPPING, you can compare the effects of market volatilities on GOODYEAR T and JINHUI SHIPPING 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 GOODYEAR T with a short position of JINHUI SHIPPING. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODYEAR T and JINHUI SHIPPING.
Diversification Opportunities for GOODYEAR T and JINHUI SHIPPING
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GOODYEAR and JINHUI is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding GOODYEAR T RUBBER and JINHUI SHIPPING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JINHUI SHIPPING and GOODYEAR T 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 GOODYEAR T RUBBER are associated (or correlated) with JINHUI SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JINHUI SHIPPING has no effect on the direction of GOODYEAR T i.e., GOODYEAR T and JINHUI SHIPPING go up and down completely randomly.
Pair Corralation between GOODYEAR T and JINHUI SHIPPING
Assuming the 90 days trading horizon GOODYEAR T RUBBER is expected to under-perform the JINHUI SHIPPING. In addition to that, GOODYEAR T is 1.13 times more volatile than JINHUI SHIPPING. It trades about -0.03 of its total potential returns per unit of risk. JINHUI SHIPPING is currently generating about 0.0 per unit of volatility. If you would invest 58.00 in JINHUI SHIPPING on August 26, 2024 and sell it today you would lose (2.00) from holding JINHUI SHIPPING or give up 3.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOODYEAR T RUBBER vs. JINHUI SHIPPING
Performance |
| Timeline |
| GOODYEAR T RUBBER |
| JINHUI SHIPPING |
GOODYEAR T and JINHUI SHIPPING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOODYEAR T and JINHUI SHIPPING
The main advantage of trading using opposite GOODYEAR T and JINHUI SHIPPING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODYEAR T position performs unexpectedly, JINHUI SHIPPING 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 JINHUI SHIPPING will offset losses from the drop in JINHUI SHIPPING's long position.The idea behind GOODYEAR T RUBBER and JINHUI SHIPPING 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.| JINHUI SHIPPING vs. GOODYEAR T RUBBER | JINHUI SHIPPING vs. Hyster Yale Materials Handling | JINHUI SHIPPING vs. SANOK RUBBER ZY | JINHUI SHIPPING vs. Singapore Telecommunications Limited |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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