Correlation Between Jinan Acetate and Solid State

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

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

Diversification Opportunities for Jinan Acetate and Solid State

-0.5

Correlation Coefficient

Jinan Acetate  Solid State

Very good diversification

The 3 months correlation between Jinan and Solid is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Jinan Acetate Chemical and Solid State System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid State System and Jinan Acetate 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 Jinan Acetate Chemical are associated (or correlated) with Solid State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid State System has no effect on the direction of Jinan Acetate i.e., Jinan Acetate and Solid State go up and down completely randomly.

Pair Corralation between Jinan Acetate and Solid State

Assuming the 90 days trading horizon Jinan Acetate is expected to generate 26.82 times less return on investment than Solid State. But when comparing it to its historical volatility, Jinan Acetate Chemical is 15.87 times less risky than Solid State. It trades about 0.03 of its potential returns per unit of risk. Solid State System is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,542  in Solid State System on September 13, 2024 and sell it today you would lose (1,282) from holding Solid State System or give up 36.19% of portfolio value over 90 days.

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

Jinan Acetate Chemical  vs.  Solid State System

Jinan Acetate Chemical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jinan Acetate Chemical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Jinan Acetate may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Solid State System

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solid State System 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.

Pair Trading with Jinan Acetate and Solid State

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

The idea behind Jinan Acetate Chemical and Solid State System 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.