Correlation Between Juewei Food and Levima Advanced

Can any of the company-specific risk be diversified away by investing in both Juewei Food and Levima Advanced 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 Juewei Food and Levima Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Juewei Food Co and Levima Advanced Materials, you can compare the effects of market volatilities on Juewei Food and Levima Advanced 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 Juewei Food with a short position of Levima Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Juewei Food and Levima Advanced.

Diversification Opportunities for Juewei Food and Levima Advanced

0.93

Correlation Coefficient

Juewei Food  Levima Advanced

Almost no diversification

The 3 months correlation between Juewei and Levima is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Juewei Food Co and Levima Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Levima Advanced Materials and Juewei Food 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 Juewei Food Co are associated (or correlated) with Levima Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Levima Advanced Materials has no effect on the direction of Juewei Food i.e., Juewei Food and Levima Advanced go up and down completely randomly.

Pair Corralation between Juewei Food and Levima Advanced

Assuming the 90 days trading horizon Juewei Food Co is expected to generate 1.21 times more return on investment than Levima Advanced. However, Juewei Food is 1.21 times more volatile than Levima Advanced Materials. It trades about 0.21 of its potential returns per unit of risk. Levima Advanced Materials is currently generating about 0.11 per unit of risk. If you would invest  1,252  in Juewei Food Co on September 2, 2024 and sell it today you would earn a total of  740.00  from holding Juewei Food Co or generate 59.11% return on investment over 90 days.

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

Juewei Food Co  vs.  Levima Advanced Materials

Juewei Food

Risk-Adjusted Performance

16 of 100

Solid

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

Levima Advanced Materials

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Juewei Food and Levima Advanced

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

The idea behind Juewei Food Co and Levima Advanced Materials 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.