Correlation Between Ju Teng and Shinkong Textile

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

By analyzing existing cross correlation between Ju Teng International and Shinkong Textile Co, you can compare the effects of market volatilities on Ju Teng and Shinkong Textile 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 Ju Teng with a short position of Shinkong Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ju Teng and Shinkong Textile.

Diversification Opportunities for Ju Teng and Shinkong Textile

0.59

Correlation Coefficient

Ju Teng  Shinkong Textile

Very weak diversification

The 3 months correlation between 9136 and Shinkong is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ju Teng International and Shinkong Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Textile and Ju Teng 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 Ju Teng International are associated (or correlated) with Shinkong Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Textile has no effect on the direction of Ju Teng i.e., Ju Teng and Shinkong Textile go up and down completely randomly.

Pair Corralation between Ju Teng and Shinkong Textile

Assuming the 90 days trading horizon Ju Teng International is expected to under-perform the Shinkong Textile. But the stock apears to be less risky and, when comparing its historical volatility, Ju Teng International is 2.02 times less risky than Shinkong Textile. The stock trades about -0.33 of its potential returns per unit of risk. The Shinkong Textile Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  4,640  in Shinkong Textile Co on September 12, 2024 and sell it today you would lose (75.00) from holding Shinkong Textile Co or give up 1.62% of portfolio value over 90 days.

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

Ju Teng International  vs.  Shinkong Textile Co

Ju Teng International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Shinkong Textile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shinkong Textile Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shinkong Textile 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 Ju Teng and Shinkong Textile

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

The idea behind Ju Teng International and Shinkong Textile Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.