Correlation Between Zhengzhou Qianweiyangchu and Sinosteel Engineering

Can any of the company-specific risk be diversified away by investing in both Zhengzhou Qianweiyangchu and Sinosteel Engineering 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 Zhengzhou Qianweiyangchu and Sinosteel Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zhengzhou Qianweiyangchu Food and Sinosteel Engineering and, you can compare the effects of market volatilities on Zhengzhou Qianweiyangchu and Sinosteel Engineering 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 Zhengzhou Qianweiyangchu with a short position of Sinosteel Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhengzhou Qianweiyangchu and Sinosteel Engineering.

Diversification Opportunities for Zhengzhou Qianweiyangchu and Sinosteel Engineering

0.72

Correlation Coefficient

Zhengzhou Qianweiyangchu  Sinosteel Engineering

Poor diversification

The 3 months correlation between Zhengzhou and Sinosteel is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Zhengzhou Qianweiyangchu Food and Sinosteel Engineering and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinosteel Engineering and and Zhengzhou Qianweiyangchu 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 Zhengzhou Qianweiyangchu Food are associated (or correlated) with Sinosteel Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinosteel Engineering and has no effect on the direction of Zhengzhou Qianweiyangchu i.e., Zhengzhou Qianweiyangchu and Sinosteel Engineering go up and down completely randomly.

Pair Corralation between Zhengzhou Qianweiyangchu and Sinosteel Engineering

Assuming the 90 days trading horizon Zhengzhou Qianweiyangchu Food is expected to under-perform the Sinosteel Engineering. In addition to that, Zhengzhou Qianweiyangchu is 1.27 times more volatile than Sinosteel Engineering and. It trades about -0.11 of its total potential returns per unit of risk. Sinosteel Engineering and is currently generating about -0.02 per unit of volatility. If you would invest  714.00  in Sinosteel Engineering and on December 1, 2024 and sell it today you would lose (26.00) from holding Sinosteel Engineering and or give up 3.64% of portfolio value over 90 days.

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

Zhengzhou Qianweiyangchu Food  vs.  Sinosteel Engineering and

Zhengzhou Qianweiyangchu

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zhengzhou Qianweiyangchu Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sinosteel Engineering and

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Zhengzhou Qianweiyangchu and Sinosteel Engineering

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

The idea behind Zhengzhou Qianweiyangchu Food and Sinosteel Engineering and 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..