Correlation Between Zhongrun Resources and Risesun Real

Can any of the company-specific risk be diversified away by investing in both Zhongrun Resources and Risesun Real 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 Zhongrun Resources and Risesun Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zhongrun Resources Investment and Risesun Real Estate, you can compare the effects of market volatilities on Zhongrun Resources and Risesun Real 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 Zhongrun Resources with a short position of Risesun Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongrun Resources and Risesun Real.

Diversification Opportunities for Zhongrun Resources and Risesun Real

0.73

Correlation Coefficient

Zhongrun Resources  Risesun Real

Poor diversification

The 3 months correlation between Zhongrun and Risesun is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Zhongrun Resources Investment and Risesun Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Risesun Real Estate and Zhongrun Resources 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 Zhongrun Resources Investment are associated (or correlated) with Risesun Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Risesun Real Estate has no effect on the direction of Zhongrun Resources i.e., Zhongrun Resources and Risesun Real go up and down completely randomly.

Pair Corralation between Zhongrun Resources and Risesun Real

Assuming the 90 days trading horizon Zhongrun Resources Investment is expected to generate 1.07 times more return on investment than Risesun Real. However, Zhongrun Resources is 1.07 times more volatile than Risesun Real Estate. It trades about 0.22 of its potential returns per unit of risk. Risesun Real Estate is currently generating about -0.31 per unit of risk. If you would invest  335.00  in Zhongrun Resources Investment on October 2, 2024 and sell it today you would earn a total of  62.00  from holding Zhongrun Resources Investment or generate 18.51% return on investment over 90 days.

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

Zhongrun Resources Investment  vs.  Risesun Real Estate

Zhongrun Resources

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongrun Resources Investment are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhongrun Resources sustained solid returns over the last few months and may actually be approaching a breakup point.

Risesun Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Risesun Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Risesun Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zhongrun Resources and Risesun Real

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

The idea behind Zhongrun Resources Investment and Risesun Real Estate 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.