Correlation Between Zhongrun Resources and SI TECH

Can any of the company-specific risk be diversified away by investing in both Zhongrun Resources and SI TECH 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 SI TECH 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 SI TECH Information Technology, you can compare the effects of market volatilities on Zhongrun Resources and SI TECH 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 SI TECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongrun Resources and SI TECH.

Diversification Opportunities for Zhongrun Resources and SI TECH

-0.41

Correlation Coefficient

Zhongrun Resources  SI TECH

Very good diversification

The 3 months correlation between Zhongrun and 300608 is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Zhongrun Resources Investment and SI TECH Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SI TECH Information 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 SI TECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SI TECH Information has no effect on the direction of Zhongrun Resources i.e., Zhongrun Resources and SI TECH go up and down completely randomly.

Pair Corralation between Zhongrun Resources and SI TECH

Assuming the 90 days trading horizon Zhongrun Resources Investment is expected to generate 1.04 times more return on investment than SI TECH. However, Zhongrun Resources is 1.04 times more volatile than SI TECH Information Technology. It trades about 0.02 of its potential returns per unit of risk. SI TECH Information Technology is currently generating about -0.02 per unit of risk. If you would invest  391.00  in Zhongrun Resources Investment on October 9, 2024 and sell it today you would lose (34.00) from holding Zhongrun Resources Investment or give up 8.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.58%
Values	Daily Returns

Zhongrun Resources Investment  vs.  SI TECH Information Technology

Zhongrun Resources

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongrun Resources Investment are ranked lower than 30 (%) 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.

SI TECH Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SI TECH Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Zhongrun Resources and SI TECH

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

The idea behind Zhongrun Resources Investment and SI TECH Information Technology 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.