Correlation Between Zotye Automobile and Shanghai V-Test

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

Diversification Opportunities for Zotye Automobile and Shanghai V-Test

-0.07

Correlation Coefficient

Zotye Automobile  Shanghai V-Test

Good diversification

The 3 months correlation between Zotye and Shanghai is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Zotye Automobile Co and Shanghai V Test Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai V Test 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 Shanghai V-Test. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai V Test has no effect on the direction of Zotye Automobile i.e., Zotye Automobile and Shanghai V-Test go up and down completely randomly.

Pair Corralation between Zotye Automobile and Shanghai V-Test

Assuming the 90 days trading horizon Zotye Automobile Co is expected to under-perform the Shanghai V-Test. In addition to that, Zotye Automobile is 1.09 times more volatile than Shanghai V Test Semiconductor. It trades about -0.04 of its total potential returns per unit of risk. Shanghai V Test Semiconductor is currently generating about 0.14 per unit of volatility. If you would invest  6,069  in Shanghai V Test Semiconductor on December 22, 2024 and sell it today you would earn a total of  1,718  from holding Shanghai V Test Semiconductor or generate 28.31% return on investment over 90 days.

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

Zotye Automobile Co  vs.  Shanghai V Test Semiconductor

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 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.

Shanghai V Test

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai V Test Semiconductor are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai V-Test sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zotye Automobile and Shanghai V-Test

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

The idea behind Zotye Automobile Co and Shanghai V Test Semiconductor 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.