Correlation Between Zhengzhou Qianweiyangchu and Zhejiang Longsheng

Can any of the company-specific risk be diversified away by investing in both Zhengzhou Qianweiyangchu and Zhejiang Longsheng 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 Zhejiang Longsheng 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 Zhejiang Longsheng Group, you can compare the effects of market volatilities on Zhengzhou Qianweiyangchu and Zhejiang Longsheng 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 Zhejiang Longsheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhengzhou Qianweiyangchu and Zhejiang Longsheng.

Diversification Opportunities for Zhengzhou Qianweiyangchu and Zhejiang Longsheng

0.76

Correlation Coefficient

Zhengzhou Qianweiyangchu  Zhejiang Longsheng

Poor diversification

The 3 months correlation between Zhengzhou and Zhejiang is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Zhengzhou Qianweiyangchu Food and Zhejiang Longsheng Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Longsheng 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 Zhejiang Longsheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Longsheng has no effect on the direction of Zhengzhou Qianweiyangchu i.e., Zhengzhou Qianweiyangchu and Zhejiang Longsheng go up and down completely randomly.

Pair Corralation between Zhengzhou Qianweiyangchu and Zhejiang Longsheng

Assuming the 90 days trading horizon Zhengzhou Qianweiyangchu Food is expected to generate 2.85 times more return on investment than Zhejiang Longsheng. However, Zhengzhou Qianweiyangchu is 2.85 times more volatile than Zhejiang Longsheng Group. It trades about 0.01 of its potential returns per unit of risk. Zhejiang Longsheng Group is currently generating about 0.01 per unit of risk. If you would invest  3,219  in Zhengzhou Qianweiyangchu Food on September 30, 2024 and sell it today you would lose (68.00) from holding Zhengzhou Qianweiyangchu Food or give up 2.11% 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.  Zhejiang Longsheng Group

Zhengzhou Qianweiyangchu

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, Zhengzhou Qianweiyangchu is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zhejiang Longsheng

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Longsheng Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zhejiang Longsheng 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 Zhejiang Longsheng

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

The idea behind Zhengzhou Qianweiyangchu Food and Zhejiang Longsheng Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.