Correlation Between Shengda Mining and JiShi Media

Can any of the company-specific risk be diversified away by investing in both Shengda Mining and JiShi Media 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 Shengda Mining and JiShi Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shengda Mining Co and JiShi Media Co, you can compare the effects of market volatilities on Shengda Mining and JiShi Media 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 Shengda Mining with a short position of JiShi Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shengda Mining and JiShi Media.

Diversification Opportunities for Shengda Mining and JiShi Media

0.4

Correlation Coefficient

Shengda Mining  JiShi Media

Very weak diversification

The 3 months correlation between Shengda and JiShi is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Shengda Mining Co and JiShi Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JiShi Media and Shengda Mining 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 Shengda Mining Co are associated (or correlated) with JiShi Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JiShi Media has no effect on the direction of Shengda Mining i.e., Shengda Mining and JiShi Media go up and down completely randomly.

Pair Corralation between Shengda Mining and JiShi Media

Assuming the 90 days trading horizon Shengda Mining Co is expected to under-perform the JiShi Media. But the stock apears to be less risky and, when comparing its historical volatility, Shengda Mining Co is 1.89 times less risky than JiShi Media. The stock trades about -0.02 of its potential returns per unit of risk. The JiShi Media Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  149.00  in JiShi Media Co on September 29, 2024 and sell it today you would earn a total of  46.00  from holding JiShi Media Co or generate 30.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Shengda Mining Co  vs.  JiShi Media Co

Shengda Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shengda Mining Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shengda Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JiShi Media

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JiShi Media Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JiShi Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shengda Mining and JiShi Media

The main advantage of trading using opposite Shengda Mining and JiShi Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shengda Mining position performs unexpectedly, JiShi Media 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 JiShi Media will offset losses from the drop in JiShi Media's long position.

The idea behind Shengda Mining Co and JiShi Media Co 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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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.