Correlation Between Xiangyang Automobile and Zhejiang Qianjiang

Can any of the company-specific risk be diversified away by investing in both Xiangyang Automobile and Zhejiang Qianjiang 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 Xiangyang Automobile and Zhejiang Qianjiang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xiangyang Automobile Bearing and Zhejiang Qianjiang Motorcycle, you can compare the effects of market volatilities on Xiangyang Automobile and Zhejiang Qianjiang 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 Xiangyang Automobile with a short position of Zhejiang Qianjiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiangyang Automobile and Zhejiang Qianjiang.

Diversification Opportunities for Xiangyang Automobile and Zhejiang Qianjiang

-0.03

Correlation Coefficient

Xiangyang Automobile  Zhejiang Qianjiang

Good diversification

The 3 months correlation between Xiangyang and Zhejiang is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Xiangyang Automobile Bearing and Zhejiang Qianjiang Motorcycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Qianjiang and Xiangyang Automobile 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 Xiangyang Automobile Bearing are associated (or correlated) with Zhejiang Qianjiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Qianjiang has no effect on the direction of Xiangyang Automobile i.e., Xiangyang Automobile and Zhejiang Qianjiang go up and down completely randomly.

Pair Corralation between Xiangyang Automobile and Zhejiang Qianjiang

Assuming the 90 days trading horizon Xiangyang Automobile is expected to generate 2.43 times less return on investment than Zhejiang Qianjiang. In addition to that, Xiangyang Automobile is 1.34 times more volatile than Zhejiang Qianjiang Motorcycle. It trades about 0.05 of its total potential returns per unit of risk. Zhejiang Qianjiang Motorcycle is currently generating about 0.17 per unit of volatility. If you would invest  1,682  in Zhejiang Qianjiang Motorcycle on October 23, 2024 and sell it today you would earn a total of  197.00  from holding Zhejiang Qianjiang Motorcycle or generate 11.71% return on investment over 90 days.

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

Xiangyang Automobile Bearing  vs.  Zhejiang Qianjiang Motorcycle

Xiangyang Automobile

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xiangyang Automobile Bearing are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiangyang Automobile sustained solid returns over the last few months and may actually be approaching a breakup point.

Zhejiang Qianjiang

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Qianjiang Motorcycle are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zhejiang Qianjiang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Xiangyang Automobile and Zhejiang Qianjiang

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

The idea behind Xiangyang Automobile Bearing and Zhejiang Qianjiang Motorcycle 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.