Correlation Between Jiangsu Financial and Yibin Tianyuan

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

By analyzing existing cross correlation between Jiangsu Financial Leasing and Yibin Tianyuan Group, you can compare the effects of market volatilities on Jiangsu Financial and Yibin Tianyuan 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 Jiangsu Financial with a short position of Yibin Tianyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Financial and Yibin Tianyuan.

Diversification Opportunities for Jiangsu Financial and Yibin Tianyuan

0.82

Correlation Coefficient

Jiangsu Financial  Yibin Tianyuan

Very poor diversification

The 3 months correlation between Jiangsu and Yibin is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Financial Leasing and Yibin Tianyuan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yibin Tianyuan Group and Jiangsu Financial 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 Jiangsu Financial Leasing are associated (or correlated) with Yibin Tianyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yibin Tianyuan Group has no effect on the direction of Jiangsu Financial i.e., Jiangsu Financial and Yibin Tianyuan go up and down completely randomly.

Pair Corralation between Jiangsu Financial and Yibin Tianyuan

Assuming the 90 days trading horizon Jiangsu Financial is expected to generate 1.36 times less return on investment than Yibin Tianyuan. But when comparing it to its historical volatility, Jiangsu Financial Leasing is 1.11 times less risky than Yibin Tianyuan. It trades about 0.15 of its potential returns per unit of risk. Yibin Tianyuan Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  370.00  in Yibin Tianyuan Group on September 12, 2024 and sell it today you would earn a total of  116.00  from holding Yibin Tianyuan Group or generate 31.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.28%
Values	Daily Returns

Jiangsu Financial Leasing  vs.  Yibin Tianyuan Group

Jiangsu Financial Leasing

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Financial Leasing are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Yibin Tianyuan Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yibin Tianyuan Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yibin Tianyuan sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiangsu Financial and Yibin Tianyuan

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

The idea behind Jiangsu Financial Leasing and Yibin Tianyuan Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.