Correlation Between Jiangsu Broadcasting and China Everbright

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

By analyzing existing cross correlation between Jiangsu Broadcasting Cable and China Everbright Bank, you can compare the effects of market volatilities on Jiangsu Broadcasting and China Everbright 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 Broadcasting with a short position of China Everbright. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Broadcasting and China Everbright.

Diversification Opportunities for Jiangsu Broadcasting and China Everbright

0.0

Correlation Coefficient

Jiangsu Broadcasting  China Everbright

Pay attention - limited upside

The 3 months correlation between Jiangsu and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Broadcasting Cable and China Everbright Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Everbright Bank and Jiangsu Broadcasting 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 Broadcasting Cable are associated (or correlated) with China Everbright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Everbright Bank has no effect on the direction of Jiangsu Broadcasting i.e., Jiangsu Broadcasting and China Everbright go up and down completely randomly.

Pair Corralation between Jiangsu Broadcasting and China Everbright

If you would invest  273.00  in Jiangsu Broadcasting Cable on September 12, 2024 and sell it today you would earn a total of  113.00  from holding Jiangsu Broadcasting Cable or generate 41.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.75%
Values	Daily Returns

Jiangsu Broadcasting Cable  vs.  China Everbright Bank

Jiangsu Broadcasting

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Broadcasting Cable are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Broadcasting sustained solid returns over the last few months and may actually be approaching a breakup point.

China Everbright Bank

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days China Everbright Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China Everbright is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jiangsu Broadcasting and China Everbright

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

The idea behind Jiangsu Broadcasting Cable and China Everbright Bank 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.