Correlation Between Kinik and Jinan Acetate

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

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

Diversification Opportunities for Kinik and Jinan Acetate

0.19

Correlation Coefficient

Kinik  Jinan Acetate

Average diversification

The 3 months correlation between Kinik and Jinan is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Kinik Co and Jinan Acetate Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinan Acetate Chemical and Kinik 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 Kinik Co are associated (or correlated) with Jinan Acetate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinan Acetate Chemical has no effect on the direction of Kinik i.e., Kinik and Jinan Acetate go up and down completely randomly.

Pair Corralation between Kinik and Jinan Acetate

Assuming the 90 days trading horizon Kinik Co is expected to generate 1.15 times more return on investment than Jinan Acetate. However, Kinik is 1.15 times more volatile than Jinan Acetate Chemical. It trades about 0.01 of its potential returns per unit of risk. Jinan Acetate Chemical is currently generating about -0.01 per unit of risk. If you would invest  30,300  in Kinik Co on September 4, 2024 and sell it today you would lose (350.00) from holding Kinik Co or give up 1.16% of portfolio value over 90 days.

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

Kinik Co  vs.  Jinan Acetate Chemical

Kinik

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinik Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Kinik is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Jinan Acetate Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jinan Acetate Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Jinan Acetate is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Kinik and Jinan Acetate

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

The idea behind Kinik Co and Jinan Acetate Chemical 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.