Correlation Between GRG Banking and Zhejiang JIULI

Can any of the company-specific risk be diversified away by investing in both GRG Banking and Zhejiang JIULI 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 GRG Banking and Zhejiang JIULI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GRG Banking Equipment and Zhejiang JIULI Hi tech, you can compare the effects of market volatilities on GRG Banking and Zhejiang JIULI 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 GRG Banking with a short position of Zhejiang JIULI. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRG Banking and Zhejiang JIULI.

Diversification Opportunities for GRG Banking and Zhejiang JIULI

0.23

Correlation Coefficient

GRG Banking  Zhejiang JIULI

Modest diversification

The 3 months correlation between GRG and Zhejiang is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding GRG Banking Equipment and Zhejiang JIULI Hi tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang JIULI Hi and GRG Banking 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 GRG Banking Equipment are associated (or correlated) with Zhejiang JIULI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang JIULI Hi has no effect on the direction of GRG Banking i.e., GRG Banking and Zhejiang JIULI go up and down completely randomly.

Pair Corralation between GRG Banking and Zhejiang JIULI

Assuming the 90 days trading horizon GRG Banking Equipment is expected to under-perform the Zhejiang JIULI. In addition to that, GRG Banking is 1.75 times more volatile than Zhejiang JIULI Hi tech. It trades about -0.02 of its total potential returns per unit of risk. Zhejiang JIULI Hi tech is currently generating about 0.05 per unit of volatility. If you would invest  2,327  in Zhejiang JIULI Hi tech on October 27, 2024 and sell it today you would earn a total of  108.00  from holding Zhejiang JIULI Hi tech or generate 4.64% return on investment over 90 days.

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

GRG Banking Equipment  vs.  Zhejiang JIULI Hi tech

GRG Banking Equipment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Zhejiang JIULI Hi

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang JIULI Hi tech are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zhejiang JIULI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GRG Banking and Zhejiang JIULI

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

The idea behind GRG Banking Equipment and Zhejiang JIULI Hi tech 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.