Correlation Between Success Electronics and Zhengping RoadBridge

Can any of the company-specific risk be diversified away by investing in both Success Electronics and Zhengping RoadBridge 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 Success Electronics and Zhengping RoadBridge into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Success Electronics and Zhengping RoadBridge Constr, you can compare the effects of market volatilities on Success Electronics and Zhengping RoadBridge 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 Success Electronics with a short position of Zhengping RoadBridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Success Electronics and Zhengping RoadBridge.

Diversification Opportunities for Success Electronics and Zhengping RoadBridge

0.08

Correlation Coefficient

Success Electronics  Zhengping RoadBridge

Significant diversification

The 3 months correlation between Success and Zhengping is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Success Electronics and Zhengping RoadBridge Constr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhengping RoadBridge and Success Electronics 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 Success Electronics are associated (or correlated) with Zhengping RoadBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhengping RoadBridge has no effect on the direction of Success Electronics i.e., Success Electronics and Zhengping RoadBridge go up and down completely randomly.

Pair Corralation between Success Electronics and Zhengping RoadBridge

Assuming the 90 days trading horizon Success Electronics is expected to generate 0.76 times more return on investment than Zhengping RoadBridge. However, Success Electronics is 1.32 times less risky than Zhengping RoadBridge. It trades about 0.22 of its potential returns per unit of risk. Zhengping RoadBridge Constr is currently generating about 0.01 per unit of risk. If you would invest  349.00  in Success Electronics on December 27, 2024 and sell it today you would earn a total of  121.00  from holding Success Electronics or generate 34.67% return on investment over 90 days.

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

Success Electronics  vs.  Zhengping RoadBridge Constr

Success Electronics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Success Electronics are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Success Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Zhengping RoadBridge

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Success Electronics and Zhengping RoadBridge

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

The idea behind Success Electronics and Zhengping RoadBridge Constr 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.