Correlation Between Zotye Automobile and Dezhan HealthCare

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

By analyzing existing cross correlation between Zotye Automobile Co and Dezhan HealthCare Co, you can compare the effects of market volatilities on Zotye Automobile and Dezhan HealthCare 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 Zotye Automobile with a short position of Dezhan HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zotye Automobile and Dezhan HealthCare.

Diversification Opportunities for Zotye Automobile and Dezhan HealthCare

0.77

Correlation Coefficient

Zotye Automobile  Dezhan HealthCare

Poor diversification

The 3 months correlation between Zotye and Dezhan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Zotye Automobile Co and Dezhan HealthCare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dezhan HealthCare and Zotye 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 Zotye Automobile Co are associated (or correlated) with Dezhan HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dezhan HealthCare has no effect on the direction of Zotye Automobile i.e., Zotye Automobile and Dezhan HealthCare go up and down completely randomly.

Pair Corralation between Zotye Automobile and Dezhan HealthCare

Assuming the 90 days trading horizon Zotye Automobile Co is expected to under-perform the Dezhan HealthCare. In addition to that, Zotye Automobile is 1.41 times more volatile than Dezhan HealthCare Co. It trades about -0.02 of its total potential returns per unit of risk. Dezhan HealthCare Co is currently generating about 0.02 per unit of volatility. If you would invest  343.00  in Dezhan HealthCare Co on December 27, 2024 and sell it today you would earn a total of  2.00  from holding Dezhan HealthCare Co or generate 0.58% return on investment over 90 days.

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

Zotye Automobile Co  vs.  Dezhan HealthCare Co

Zotye Automobile

Risk-Adjusted Performance

Very Weak

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

Dezhan HealthCare

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dezhan HealthCare Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dezhan HealthCare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zotye Automobile and Dezhan HealthCare

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

The idea behind Zotye Automobile Co and Dezhan HealthCare 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.

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 Stocks Directory module to find actively traded stocks across global markets.