Correlation Between Jinli Group and De Licacy

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

By analyzing existing cross correlation between Jinli Group Holdings and De Licacy Industrial, you can compare the effects of market volatilities on Jinli Group and De Licacy 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 Jinli Group with a short position of De Licacy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinli Group and De Licacy.

Diversification Opportunities for Jinli Group and De Licacy

0.56

Correlation Coefficient

Jinli Group  De Licacy

Very weak diversification

The 3 months correlation between Jinli and 1464 is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Jinli Group Holdings and De Licacy Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Licacy Industrial and Jinli Group 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 Jinli Group Holdings are associated (or correlated) with De Licacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Licacy Industrial has no effect on the direction of Jinli Group i.e., Jinli Group and De Licacy go up and down completely randomly.

Pair Corralation between Jinli Group and De Licacy

Assuming the 90 days trading horizon Jinli Group Holdings is expected to generate 1.3 times more return on investment than De Licacy. However, Jinli Group is 1.3 times more volatile than De Licacy Industrial. It trades about 0.03 of its potential returns per unit of risk. De Licacy Industrial is currently generating about 0.02 per unit of risk. If you would invest  1,120  in Jinli Group Holdings on September 3, 2024 and sell it today you would earn a total of  235.00  from holding Jinli Group Holdings or generate 20.98% return on investment over 90 days.

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

Jinli Group Holdings  vs.  De Licacy Industrial

Jinli Group Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jinli Group Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Jinli Group showed solid returns over the last few months and may actually be approaching a breakup point.

De Licacy Industrial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in De Licacy Industrial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, De Licacy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jinli Group and De Licacy

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

The idea behind Jinli Group Holdings and De Licacy Industrial 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.