Correlation Between Eastern Air and Jinyu Bio

Can any of the company-specific risk be diversified away by investing in both Eastern Air and Jinyu Bio 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 Eastern Air and Jinyu Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eastern Air Logistics and Jinyu Bio Technology Co, you can compare the effects of market volatilities on Eastern Air and Jinyu Bio 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 Eastern Air with a short position of Jinyu Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Air and Jinyu Bio.

Diversification Opportunities for Eastern Air and Jinyu Bio

0.72

Correlation Coefficient

Eastern Air  Jinyu Bio

Poor diversification

The 3 months correlation between Eastern and Jinyu is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Air Logistics and Jinyu Bio Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinyu Bio Technology and Eastern Air 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 Eastern Air Logistics are associated (or correlated) with Jinyu Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinyu Bio Technology has no effect on the direction of Eastern Air i.e., Eastern Air and Jinyu Bio go up and down completely randomly.

Pair Corralation between Eastern Air and Jinyu Bio

Assuming the 90 days trading horizon Eastern Air is expected to generate 2.42 times less return on investment than Jinyu Bio. But when comparing it to its historical volatility, Eastern Air Logistics is 1.17 times less risky than Jinyu Bio. It trades about 0.1 of its potential returns per unit of risk. Jinyu Bio Technology Co is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  567.00  in Jinyu Bio Technology Co on September 16, 2024 and sell it today you would earn a total of  217.00  from holding Jinyu Bio Technology Co or generate 38.27% return on investment over 90 days.

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

Eastern Air Logistics  vs.  Jinyu Bio Technology Co

Eastern Air Logistics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Air Logistics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eastern Air sustained solid returns over the last few months and may actually be approaching a breakup point.

Jinyu Bio Technology

Risk-Adjusted Performance

16 of 100

Solid

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

Pair Trading with Eastern Air and Jinyu Bio

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

The idea behind Eastern Air Logistics and Jinyu Bio Technology 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.