Correlation Between Changchun High and Zoomlion Heavy

Can any of the company-specific risk be diversified away by investing in both Changchun High and Zoomlion Heavy 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 Changchun High and Zoomlion Heavy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Changchun High New and Zoomlion Heavy Industry, you can compare the effects of market volatilities on Changchun High and Zoomlion Heavy 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 Changchun High with a short position of Zoomlion Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changchun High and Zoomlion Heavy.

Diversification Opportunities for Changchun High and Zoomlion Heavy

0.0

Correlation Coefficient

Changchun High  Zoomlion Heavy

Pay attention - limited upside

The 3 months correlation between Changchun and Zoomlion is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Changchun High New and Zoomlion Heavy Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoomlion Heavy Industry and Changchun High 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 Changchun High New are associated (or correlated) with Zoomlion Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoomlion Heavy Industry has no effect on the direction of Changchun High i.e., Changchun High and Zoomlion Heavy go up and down completely randomly.

Pair Corralation between Changchun High and Zoomlion Heavy

If you would invest  534.00  in Zoomlion Heavy Industry on October 12, 2024 and sell it today you would earn a total of  152.00  from holding Zoomlion Heavy Industry or generate 28.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.21%
Values	Daily Returns

Changchun High New  vs.  Zoomlion Heavy Industry

Changchun High New

Risk-Adjusted Performance

0 of 100

Very Weak

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

Zoomlion Heavy Industry

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Changchun High and Zoomlion Heavy

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

The idea behind Changchun High New and Zoomlion Heavy Industry 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.