Correlation Between Zhongrun Resources and Jiangsu Xinri

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

Diversification Opportunities for Zhongrun Resources and Jiangsu Xinri

-0.32

Correlation Coefficient

Zhongrun Resources  Jiangsu Xinri

Very good diversification

The 3 months correlation between Zhongrun and Jiangsu is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Zhongrun Resources Investment and Jiangsu Xinri E Vehicle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Xinri E 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 Jiangsu Xinri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Xinri E has no effect on the direction of Zhongrun Resources i.e., Zhongrun Resources and Jiangsu Xinri go up and down completely randomly.

Pair Corralation between Zhongrun Resources and Jiangsu Xinri

Assuming the 90 days trading horizon Zhongrun Resources Investment is expected to generate 1.81 times more return on investment than Jiangsu Xinri. However, Zhongrun Resources is 1.81 times more volatile than Jiangsu Xinri E Vehicle. It trades about 0.28 of its potential returns per unit of risk. Jiangsu Xinri E Vehicle is currently generating about -0.04 per unit of risk. If you would invest  214.00  in Zhongrun Resources Investment on October 24, 2024 and sell it today you would earn a total of  202.00  from holding Zhongrun Resources Investment or generate 94.39% return on investment over 90 days.

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

Zhongrun Resources Investment  vs.  Jiangsu Xinri E Vehicle

Zhongrun Resources

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongrun Resources Investment are ranked lower than 21 (%) 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.

Jiangsu Xinri E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jiangsu Xinri E Vehicle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jiangsu Xinri 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 Jiangsu Xinri

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

The idea behind Zhongrun Resources Investment and Jiangsu Xinri E Vehicle 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.