Correlation Between Jiangsu GDK and Tjk Machinery

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

By analyzing existing cross correlation between Jiangsu GDK Biotechnology and Tjk Machinery Tianjin, you can compare the effects of market volatilities on Jiangsu GDK and Tjk Machinery 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 GDK with a short position of Tjk Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu GDK and Tjk Machinery.

Diversification Opportunities for Jiangsu GDK and Tjk Machinery

0.9

Correlation Coefficient

Jiangsu GDK  Tjk Machinery

Almost no diversification

The 3 months correlation between Jiangsu and Tjk is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu GDK Biotechnology and Tjk Machinery Tianjin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tjk Machinery Tianjin and Jiangsu GDK 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 GDK Biotechnology are associated (or correlated) with Tjk Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tjk Machinery Tianjin has no effect on the direction of Jiangsu GDK i.e., Jiangsu GDK and Tjk Machinery go up and down completely randomly.

Pair Corralation between Jiangsu GDK and Tjk Machinery

Assuming the 90 days trading horizon Jiangsu GDK Biotechnology is expected to under-perform the Tjk Machinery. In addition to that, Jiangsu GDK is 1.14 times more volatile than Tjk Machinery Tianjin. It trades about -0.25 of its total potential returns per unit of risk. Tjk Machinery Tianjin is currently generating about -0.11 per unit of volatility. If you would invest  1,449  in Tjk Machinery Tianjin on September 26, 2024 and sell it today you would lose (97.00) from holding Tjk Machinery Tianjin or give up 6.69% of portfolio value over 90 days.

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

Jiangsu GDK Biotechnology  vs.  Tjk Machinery Tianjin

Jiangsu GDK Biotechnology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu GDK Biotechnology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu GDK sustained solid returns over the last few months and may actually be approaching a breakup point.

Tjk Machinery Tianjin

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Jiangsu GDK and Tjk Machinery

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

The idea behind Jiangsu GDK Biotechnology and Tjk Machinery Tianjin 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.