Correlation Between Zotye Automobile and Jafron Biomedical

Can any of the company-specific risk be diversified away by investing in both Zotye Automobile and Jafron Biomedical 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 Jafron Biomedical 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 Jafron Biomedical Co, you can compare the effects of market volatilities on Zotye Automobile and Jafron Biomedical 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 Jafron Biomedical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zotye Automobile and Jafron Biomedical.

Diversification Opportunities for Zotye Automobile and Jafron Biomedical

0.14

Correlation Coefficient

Zotye Automobile  Jafron Biomedical

Average diversification

The 3 months correlation between Zotye and Jafron is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Zotye Automobile Co and Jafron Biomedical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jafron Biomedical 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 Jafron Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jafron Biomedical has no effect on the direction of Zotye Automobile i.e., Zotye Automobile and Jafron Biomedical go up and down completely randomly.

Pair Corralation between Zotye Automobile and Jafron Biomedical

Assuming the 90 days trading horizon Zotye Automobile Co is expected to generate 2.86 times more return on investment than Jafron Biomedical. However, Zotye Automobile is 2.86 times more volatile than Jafron Biomedical Co. It trades about 0.09 of its potential returns per unit of risk. Jafron Biomedical Co is currently generating about -0.07 per unit of risk. If you would invest  182.00  in Zotye Automobile Co on October 21, 2024 and sell it today you would earn a total of  43.00  from holding Zotye Automobile Co or generate 23.63% return on investment over 90 days.

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

Zotye Automobile Co  vs.  Jafron Biomedical Co

Zotye Automobile

Risk-Adjusted Performance

6 of 100

Modest

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

Jafron Biomedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jafron Biomedical Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Zotye Automobile and Jafron Biomedical

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

The idea behind Zotye Automobile Co and Jafron Biomedical 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.