Correlation Between Jiangxi Ganfeng and Zhejiang Publishing

Can any of the company-specific risk be diversified away by investing in both Jiangxi Ganfeng and Zhejiang Publishing 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 Jiangxi Ganfeng and Zhejiang Publishing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiangxi Ganfeng Lithium and Zhejiang Publishing Media, you can compare the effects of market volatilities on Jiangxi Ganfeng and Zhejiang Publishing 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 Jiangxi Ganfeng with a short position of Zhejiang Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangxi Ganfeng and Zhejiang Publishing.

Diversification Opportunities for Jiangxi Ganfeng and Zhejiang Publishing

0.15

Correlation Coefficient

Jiangxi Ganfeng  Zhejiang Publishing

Average diversification

The 3 months correlation between Jiangxi and Zhejiang is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Jiangxi Ganfeng Lithium and Zhejiang Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Publishing Media and Jiangxi Ganfeng 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 Jiangxi Ganfeng Lithium are associated (or correlated) with Zhejiang Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Publishing Media has no effect on the direction of Jiangxi Ganfeng i.e., Jiangxi Ganfeng and Zhejiang Publishing go up and down completely randomly.

Pair Corralation between Jiangxi Ganfeng and Zhejiang Publishing

Assuming the 90 days trading horizon Jiangxi Ganfeng Lithium is expected to under-perform the Zhejiang Publishing. But the stock apears to be less risky and, when comparing its historical volatility, Jiangxi Ganfeng Lithium is 1.02 times less risky than Zhejiang Publishing. The stock trades about -0.34 of its potential returns per unit of risk. The Zhejiang Publishing Media is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  784.00  in Zhejiang Publishing Media on September 25, 2024 and sell it today you would earn a total of  30.00  from holding Zhejiang Publishing Media or generate 3.83% return on investment over 90 days.

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

Jiangxi Ganfeng Lithium  vs.  Zhejiang Publishing Media

Jiangxi Ganfeng Lithium

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangxi Ganfeng Lithium are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangxi Ganfeng sustained solid returns over the last few months and may actually be approaching a breakup point.

Zhejiang Publishing Media

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Publishing Media are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zhejiang Publishing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jiangxi Ganfeng and Zhejiang Publishing

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

The idea behind Jiangxi Ganfeng Lithium and Zhejiang Publishing Media 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.