Correlation Between Chengtun Mining and JA Solar

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

By analyzing existing cross correlation between Chengtun Mining Group and JA Solar Technology, you can compare the effects of market volatilities on Chengtun Mining and JA Solar 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 Chengtun Mining with a short position of JA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengtun Mining and JA Solar.

Diversification Opportunities for Chengtun Mining and JA Solar

0.97

Correlation Coefficient

Chengtun Mining  JA Solar

Almost no diversification

The 3 months correlation between Chengtun and 002459 is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Chengtun Mining Group and JA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JA Solar Technology and Chengtun Mining 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 Chengtun Mining Group are associated (or correlated) with JA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JA Solar Technology has no effect on the direction of Chengtun Mining i.e., Chengtun Mining and JA Solar go up and down completely randomly.

Pair Corralation between Chengtun Mining and JA Solar

Assuming the 90 days trading horizon Chengtun Mining is expected to generate 1.42 times less return on investment than JA Solar. But when comparing it to its historical volatility, Chengtun Mining Group is 1.89 times less risky than JA Solar. It trades about 0.21 of its potential returns per unit of risk. JA Solar Technology is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,027  in JA Solar Technology on September 19, 2024 and sell it today you would earn a total of  464.00  from holding JA Solar Technology or generate 45.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.33%
Values	Daily Returns

Chengtun Mining Group  vs.  JA Solar Technology

Chengtun Mining Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chengtun Mining Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chengtun Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

JA Solar Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JA Solar Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JA Solar sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chengtun Mining and JA Solar

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

The idea behind Chengtun Mining Group and JA Solar Technology 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.