Correlation Between Nan Liu and Jourdeness

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

By analyzing existing cross correlation between Nan Liu Enterprise and Jourdeness Group, you can compare the effects of market volatilities on Nan Liu and Jourdeness 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 Nan Liu with a short position of Jourdeness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Liu and Jourdeness.

Diversification Opportunities for Nan Liu and Jourdeness

0.47

Correlation Coefficient

Nan Liu  Jourdeness

Very weak diversification

The 3 months correlation between Nan and Jourdeness is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nan Liu Enterprise and Jourdeness Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jourdeness Group and Nan Liu 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 Nan Liu Enterprise are associated (or correlated) with Jourdeness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jourdeness Group has no effect on the direction of Nan Liu i.e., Nan Liu and Jourdeness go up and down completely randomly.

Pair Corralation between Nan Liu and Jourdeness

Assuming the 90 days trading horizon Nan Liu Enterprise is expected to under-perform the Jourdeness. But the stock apears to be less risky and, when comparing its historical volatility, Nan Liu Enterprise is 2.35 times less risky than Jourdeness. The stock trades about -0.17 of its potential returns per unit of risk. The Jourdeness Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  4,730  in Jourdeness Group on September 24, 2024 and sell it today you would lose (260.00) from holding Jourdeness Group or give up 5.5% of portfolio value over 90 days.

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

Nan Liu Enterprise  vs.  Jourdeness Group

Nan Liu Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nan Liu Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Jourdeness Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jourdeness Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Jourdeness is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Nan Liu and Jourdeness

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

The idea behind Nan Liu Enterprise and Jourdeness 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.