Correlation Between Jointo Energy and Zangge Holding

Can any of the company-specific risk be diversified away by investing in both Jointo Energy and Zangge Holding 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 Jointo Energy and Zangge Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jointo Energy Investment and Zangge Holding Co, you can compare the effects of market volatilities on Jointo Energy and Zangge Holding 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 Jointo Energy with a short position of Zangge Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jointo Energy and Zangge Holding.

Diversification Opportunities for Jointo Energy and Zangge Holding

0.54

Correlation Coefficient

Jointo Energy  Zangge Holding

Very weak diversification

The 3 months correlation between Jointo and Zangge is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Jointo Energy Investment and Zangge Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zangge Holding and Jointo Energy 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 Jointo Energy Investment are associated (or correlated) with Zangge Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zangge Holding has no effect on the direction of Jointo Energy i.e., Jointo Energy and Zangge Holding go up and down completely randomly.

Pair Corralation between Jointo Energy and Zangge Holding

Assuming the 90 days trading horizon Jointo Energy Investment is expected to generate 2.1 times more return on investment than Zangge Holding. However, Jointo Energy is 2.1 times more volatile than Zangge Holding Co. It trades about 0.23 of its potential returns per unit of risk. Zangge Holding Co is currently generating about 0.02 per unit of risk. If you would invest  508.00  in Jointo Energy Investment on September 27, 2024 and sell it today you would earn a total of  86.00  from holding Jointo Energy Investment or generate 16.93% return on investment over 90 days.

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

Jointo Energy Investment  vs.  Zangge Holding Co

Jointo Energy Investment

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jointo Energy Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jointo Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Zangge Holding

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zangge Holding Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zangge Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jointo Energy and Zangge Holding

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

The idea behind Jointo Energy Investment and Zangge Holding 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.