Correlation Between Jiangxi Lianchuang and IShares MSCI

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

By analyzing existing cross correlation between Jiangxi Lianchuang Opto electronic and iShares MSCI USA, you can compare the effects of market volatilities on Jiangxi Lianchuang and IShares MSCI 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 Jiangxi Lianchuang with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangxi Lianchuang and IShares MSCI.

Diversification Opportunities for Jiangxi Lianchuang and IShares MSCI

0.8

Correlation Coefficient

Jiangxi Lianchuang  IShares MSCI

Very poor diversification

The 3 months correlation between Jiangxi and IShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Jiangxi Lianchuang Opto electr and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA and Jiangxi Lianchuang 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 Jiangxi Lianchuang Opto electronic are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI USA has no effect on the direction of Jiangxi Lianchuang i.e., Jiangxi Lianchuang and IShares MSCI go up and down completely randomly.

Pair Corralation between Jiangxi Lianchuang and IShares MSCI

Assuming the 90 days trading horizon Jiangxi Lianchuang Opto electronic is expected to generate 6.35 times more return on investment than IShares MSCI. However, Jiangxi Lianchuang is 6.35 times more volatile than iShares MSCI USA. It trades about 0.27 of its potential returns per unit of risk. iShares MSCI USA is currently generating about 0.15 per unit of risk. If you would invest  2,380  in Jiangxi Lianchuang Opto electronic on August 23, 2024 and sell it today you would earn a total of  2,488  from holding Jiangxi Lianchuang Opto electronic or generate 104.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	90.63%
Values	Daily Returns

Jiangxi Lianchuang Opto electr  vs.  iShares MSCI USA

Jiangxi Lianchuang Opto

Risk-Adjusted Performance

21 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangxi Lianchuang Opto electronic are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangxi Lianchuang sustained solid returns over the last few months and may actually be approaching a breakup point.

iShares MSCI USA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI USA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile primary indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Jiangxi Lianchuang and IShares MSCI

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

The idea behind Jiangxi Lianchuang Opto electronic and iShares MSCI USA 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.