Correlation Between Leader Electronics and Jinli Group

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

By analyzing existing cross correlation between Leader Electronics and Jinli Group Holdings, you can compare the effects of market volatilities on Leader Electronics and Jinli Group 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 Leader Electronics with a short position of Jinli Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Electronics and Jinli Group.

Diversification Opportunities for Leader Electronics and Jinli Group

-0.53

Correlation Coefficient

Leader Electronics  Jinli Group

Excellent diversification

The 3 months correlation between Leader and Jinli is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Leader Electronics and Jinli Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinli Group Holdings and Leader Electronics 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 Leader Electronics are associated (or correlated) with Jinli Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinli Group Holdings has no effect on the direction of Leader Electronics i.e., Leader Electronics and Jinli Group go up and down completely randomly.

Pair Corralation between Leader Electronics and Jinli Group

Assuming the 90 days trading horizon Leader Electronics is expected to under-perform the Jinli Group. But the stock apears to be less risky and, when comparing its historical volatility, Leader Electronics is 1.41 times less risky than Jinli Group. The stock trades about -0.08 of its potential returns per unit of risk. The Jinli Group Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,135  in Jinli Group Holdings on October 1, 2024 and sell it today you would earn a total of  45.00  from holding Jinli Group Holdings or generate 3.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Leader Electronics  vs.  Jinli Group Holdings

Leader Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leader Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Jinli Group Holdings

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jinli Group Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Jinli Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Leader Electronics and Jinli Group

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

The idea behind Leader Electronics and Jinli Group Holdings 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.