Correlation Between Zoje Resources and Jiangsu Zhongtian

Can any of the company-specific risk be diversified away by investing in both Zoje Resources and Jiangsu Zhongtian 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 Jiangsu Zhongtian 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 Jiangsu Zhongtian Technology, you can compare the effects of market volatilities on Zoje Resources and Jiangsu Zhongtian 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 Jiangsu Zhongtian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoje Resources and Jiangsu Zhongtian.

Diversification Opportunities for Zoje Resources and Jiangsu Zhongtian

0.45

Correlation Coefficient

Zoje Resources  Jiangsu Zhongtian

Very weak diversification

The 3 months correlation between Zoje and Jiangsu is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Zoje Resources Investment and Jiangsu Zhongtian Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Zhongtian 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 Jiangsu Zhongtian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Zhongtian has no effect on the direction of Zoje Resources i.e., Zoje Resources and Jiangsu Zhongtian go up and down completely randomly.

Pair Corralation between Zoje Resources and Jiangsu Zhongtian

Assuming the 90 days trading horizon Zoje Resources Investment is expected to generate 1.95 times more return on investment than Jiangsu Zhongtian. However, Zoje Resources is 1.95 times more volatile than Jiangsu Zhongtian Technology. It trades about -0.04 of its potential returns per unit of risk. Jiangsu Zhongtian Technology is currently generating about -0.15 per unit of risk. If you would invest  269.00  in Zoje Resources Investment on December 4, 2024 and sell it today you would lose (28.00) from holding Zoje Resources Investment or give up 10.41% of portfolio value over 90 days.

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

Zoje Resources Investment  vs.  Jiangsu Zhongtian Technology

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.

Jiangsu Zhongtian

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jiangsu Zhongtian Technology 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.

Pair Trading with Zoje Resources and Jiangsu Zhongtian

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

The idea behind Zoje Resources Investment and Jiangsu Zhongtian Technology 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.