Correlation Between Guangdong Zhongsheng and Runjian Communication

Can any of the company-specific risk be diversified away by investing in both Guangdong Zhongsheng and Runjian Communication 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 Guangdong Zhongsheng and Runjian Communication into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guangdong Zhongsheng Pharmaceutical and Runjian Communication Co, you can compare the effects of market volatilities on Guangdong Zhongsheng and Runjian Communication 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 Guangdong Zhongsheng with a short position of Runjian Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Zhongsheng and Runjian Communication.

Diversification Opportunities for Guangdong Zhongsheng and Runjian Communication

-0.32

Correlation Coefficient

Guangdong Zhongsheng  Runjian Communication

Very good diversification

The 3 months correlation between Guangdong and Runjian is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Zhongsheng Pharmaceu and Runjian Communication Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Runjian Communication and Guangdong Zhongsheng 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 Guangdong Zhongsheng Pharmaceutical are associated (or correlated) with Runjian Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Runjian Communication has no effect on the direction of Guangdong Zhongsheng i.e., Guangdong Zhongsheng and Runjian Communication go up and down completely randomly.

Pair Corralation between Guangdong Zhongsheng and Runjian Communication

Assuming the 90 days trading horizon Guangdong Zhongsheng Pharmaceutical is expected to under-perform the Runjian Communication. But the stock apears to be less risky and, when comparing its historical volatility, Guangdong Zhongsheng Pharmaceutical is 1.24 times less risky than Runjian Communication. The stock trades about -0.11 of its potential returns per unit of risk. The Runjian Communication Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,079  in Runjian Communication Co on October 25, 2024 and sell it today you would earn a total of  241.00  from holding Runjian Communication Co or generate 7.83% return on investment over 90 days.

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

Guangdong Zhongsheng Pharmaceu  vs.  Runjian Communication Co

Guangdong Zhongsheng

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangdong Zhongsheng Pharmaceutical 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Runjian Communication

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Runjian Communication Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Runjian Communication may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Guangdong Zhongsheng and Runjian Communication

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

The idea behind Guangdong Zhongsheng Pharmaceutical and Runjian Communication Co 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.