Correlation Between J+J SNACK and China Resources
Can any of the company-specific risk be diversified away by investing in both J+J SNACK and China Resources 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 J+J SNACK and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JJ SNACK FOODS and China Resources Beer, you can compare the effects of market volatilities on J+J SNACK and China Resources 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 J+J SNACK with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of J+J SNACK and China Resources.
Diversification Opportunities for J+J SNACK and China Resources
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between J+J and China is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer and J+J SNACK 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 JJ SNACK FOODS are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of J+J SNACK i.e., J+J SNACK and China Resources go up and down completely randomly.
Pair Corralation between J+J SNACK and China Resources
Assuming the 90 days trading horizon JJ SNACK FOODS is expected to generate 0.15 times more return on investment than China Resources. However, JJ SNACK FOODS is 6.83 times less risky than China Resources. It trades about 0.27 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.04 per unit of risk. If you would invest 15,724 in JJ SNACK FOODS on September 20, 2024 and sell it today you would earn a total of 476.00 from holding JJ SNACK FOODS or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JJ SNACK FOODS vs. China Resources Beer
Performance |
| Timeline |
| JJ SNACK FOODS |
| China Resources Beer |
J+J SNACK and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J+J SNACK and China Resources
The main advantage of trading using opposite J+J SNACK and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J+J SNACK position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| J+J SNACK vs. Superior Plus Corp | J+J SNACK vs. SIVERS SEMICONDUCTORS AB | J+J SNACK vs. NorAm Drilling AS | J+J SNACK vs. Norsk Hydro ASA |
| China Resources vs. Ribbon Communications | China Resources vs. SUN ART RETAIL | China Resources vs. SK TELECOM TDADR | China Resources vs. SIDETRADE EO 1 |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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