Correlation Between Jia Jie and Honmyue Enterprise

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

By analyzing existing cross correlation between Jia Jie Biomedical and Honmyue Enterprise Co, you can compare the effects of market volatilities on Jia Jie and Honmyue Enterprise 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 Jia Jie with a short position of Honmyue Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jia Jie and Honmyue Enterprise.

Diversification Opportunities for Jia Jie and Honmyue Enterprise

-0.7

Correlation Coefficient

Jia Jie  Honmyue Enterprise

Excellent diversification

The 3 months correlation between Jia and Honmyue is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Jia Jie Biomedical and Honmyue Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honmyue Enterprise and Jia Jie 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 Jia Jie Biomedical are associated (or correlated) with Honmyue Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honmyue Enterprise has no effect on the direction of Jia Jie i.e., Jia Jie and Honmyue Enterprise go up and down completely randomly.

Pair Corralation between Jia Jie and Honmyue Enterprise

Assuming the 90 days trading horizon Jia Jie Biomedical is expected to under-perform the Honmyue Enterprise. But the stock apears to be less risky and, when comparing its historical volatility, Jia Jie Biomedical is 1.1 times less risky than Honmyue Enterprise. The stock trades about -0.19 of its potential returns per unit of risk. The Honmyue Enterprise Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,230  in Honmyue Enterprise Co on September 3, 2024 and sell it today you would earn a total of  100.00  from holding Honmyue Enterprise Co or generate 8.13% return on investment over 90 days.

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

Jia Jie Biomedical  vs.  Honmyue Enterprise Co

Jia Jie Biomedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jia Jie Biomedical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Honmyue Enterprise

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Honmyue Enterprise Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Honmyue Enterprise may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jia Jie and Honmyue Enterprise

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

The idea behind Jia Jie Biomedical and Honmyue Enterprise 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.