Correlation Between Jiangsu Yanghe and Grandblue Environment

Can any of the company-specific risk be diversified away by investing in both Jiangsu Yanghe and Grandblue Environment 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 Yanghe and Grandblue Environment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiangsu Yanghe Brewery and Grandblue Environment Co, you can compare the effects of market volatilities on Jiangsu Yanghe and Grandblue Environment 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 Yanghe with a short position of Grandblue Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Yanghe and Grandblue Environment.

Diversification Opportunities for Jiangsu Yanghe and Grandblue Environment

0.62

Correlation Coefficient

Jiangsu Yanghe  Grandblue Environment

Poor diversification

The 3 months correlation between Jiangsu and Grandblue is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Yanghe Brewery and Grandblue Environment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grandblue Environment and Jiangsu Yanghe 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 Yanghe Brewery are associated (or correlated) with Grandblue Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grandblue Environment has no effect on the direction of Jiangsu Yanghe i.e., Jiangsu Yanghe and Grandblue Environment go up and down completely randomly.

Pair Corralation between Jiangsu Yanghe and Grandblue Environment

Assuming the 90 days trading horizon Jiangsu Yanghe Brewery is expected to under-perform the Grandblue Environment. But the stock apears to be less risky and, when comparing its historical volatility, Jiangsu Yanghe Brewery is 1.17 times less risky than Grandblue Environment. The stock trades about -0.04 of its potential returns per unit of risk. The Grandblue Environment Co is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  2,152  in Grandblue Environment Co on September 25, 2024 and sell it today you would earn a total of  192.00  from holding Grandblue Environment Co or generate 8.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Jiangsu Yanghe Brewery  vs.  Grandblue Environment Co

Jiangsu Yanghe Brewery

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Yanghe Brewery are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Yanghe may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Grandblue Environment

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grandblue Environment Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Grandblue Environment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiangsu Yanghe and Grandblue Environment

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

The idea behind Jiangsu Yanghe Brewery and Grandblue Environment 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.