Correlation Between Zoje Resources and Guangzhou Zhujiang

Can any of the company-specific risk be diversified away by investing in both Zoje Resources and Guangzhou Zhujiang 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 Zoje Resources and Guangzhou Zhujiang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zoje Resources Investment and Guangzhou Zhujiang Brewery, you can compare the effects of market volatilities on Zoje Resources and Guangzhou Zhujiang 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 Zoje Resources with a short position of Guangzhou Zhujiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoje Resources and Guangzhou Zhujiang.

Diversification Opportunities for Zoje Resources and Guangzhou Zhujiang

-0.07

Correlation Coefficient

Zoje Resources  Guangzhou Zhujiang

Good diversification

The 3 months correlation between Zoje and Guangzhou is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Zoje Resources Investment and Guangzhou Zhujiang Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Zhujiang and Zoje Resources 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 Zoje Resources Investment are associated (or correlated) with Guangzhou Zhujiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Zhujiang has no effect on the direction of Zoje Resources i.e., Zoje Resources and Guangzhou Zhujiang go up and down completely randomly.

Pair Corralation between Zoje Resources and Guangzhou Zhujiang

Assuming the 90 days trading horizon Zoje Resources Investment is expected to under-perform the Guangzhou Zhujiang. In addition to that, Zoje Resources is 1.87 times more volatile than Guangzhou Zhujiang Brewery. It trades about -0.04 of its total potential returns per unit of risk. Guangzhou Zhujiang Brewery is currently generating about 0.08 per unit of volatility. If you would invest  971.00  in Guangzhou Zhujiang Brewery on December 26, 2024 and sell it today you would earn a total of  53.00  from holding Guangzhou Zhujiang Brewery or generate 5.46% return on investment over 90 days.

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

Zoje Resources Investment  vs.  Guangzhou Zhujiang Brewery

Zoje Resources Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zoje Resources Investment 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.

Guangzhou Zhujiang

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Zhujiang Brewery are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Zhujiang may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Zoje Resources and Guangzhou Zhujiang

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

The idea behind Zoje Resources Investment and Guangzhou Zhujiang Brewery 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .