Correlation Between Jinli Group and New Palace

Can any of the company-specific risk be diversified away by investing in both Jinli Group and New Palace 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 New Palace 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 New Palace International, you can compare the effects of market volatilities on Jinli Group and New Palace 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 New Palace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinli Group and New Palace.

Diversification Opportunities for Jinli Group and New Palace

0.42

Correlation Coefficient

Jinli Group  New Palace

Very weak diversification

The 3 months correlation between Jinli and New is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Jinli Group Holdings and New Palace International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Palace International 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 New Palace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Palace International has no effect on the direction of Jinli Group i.e., Jinli Group and New Palace go up and down completely randomly.

Pair Corralation between Jinli Group and New Palace

Assuming the 90 days trading horizon Jinli Group Holdings is expected to generate 2.2 times more return on investment than New Palace. However, Jinli Group is 2.2 times more volatile than New Palace International. It trades about 0.15 of its potential returns per unit of risk. New Palace International is currently generating about 0.03 per unit of risk. If you would invest  980.00  in Jinli Group Holdings on September 1, 2024 and sell it today you would earn a total of  310.00  from holding Jinli Group Holdings or generate 31.63% 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.  New Palace International

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.

New Palace International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New Palace International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, New Palace 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 Jinli Group and New Palace

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

The idea behind Jinli Group Holdings and New Palace International 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.