Correlation Between Zhejiang Kingland and Glodon Software

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

By analyzing existing cross correlation between Zhejiang Kingland Pipeline and Glodon Software Co, you can compare the effects of market volatilities on Zhejiang Kingland and Glodon Software 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 Zhejiang Kingland with a short position of Glodon Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Kingland and Glodon Software.

Diversification Opportunities for Zhejiang Kingland and Glodon Software

0.94

Correlation Coefficient

Zhejiang Kingland  Glodon Software

Almost no diversification

The 3 months correlation between Zhejiang and Glodon is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Kingland Pipeline and Glodon Software Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glodon Software and Zhejiang Kingland 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 Zhejiang Kingland Pipeline are associated (or correlated) with Glodon Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glodon Software has no effect on the direction of Zhejiang Kingland i.e., Zhejiang Kingland and Glodon Software go up and down completely randomly.

Pair Corralation between Zhejiang Kingland and Glodon Software

Assuming the 90 days trading horizon Zhejiang Kingland is expected to generate 1.56 times less return on investment than Glodon Software. But when comparing it to its historical volatility, Zhejiang Kingland Pipeline is 1.68 times less risky than Glodon Software. It trades about 0.15 of its potential returns per unit of risk. Glodon Software Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  954.00  in Glodon Software Co on September 4, 2024 and sell it today you would earn a total of  348.00  from holding Glodon Software Co or generate 36.48% return on investment over 90 days.

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

Zhejiang Kingland Pipeline  vs.  Glodon Software Co

Zhejiang Kingland

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Kingland Pipeline are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhejiang Kingland sustained solid returns over the last few months and may actually be approaching a breakup point.

Glodon Software

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Glodon Software Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Glodon Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhejiang Kingland and Glodon Software

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

The idea behind Zhejiang Kingland Pipeline and Glodon Software 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.