Correlation Between Zhejiang Kingland and Beijing Compass

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

Diversification Opportunities for Zhejiang Kingland and Beijing Compass

0.0

Correlation Coefficient

Zhejiang Kingland  Beijing Compass

Pay attention - limited upside

The 3 months correlation between Zhejiang and Beijing is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Kingland Pipeline and Beijing Compass Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Compass Tech 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 Beijing Compass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Compass Tech has no effect on the direction of Zhejiang Kingland i.e., Zhejiang Kingland and Beijing Compass go up and down completely randomly.

Pair Corralation between Zhejiang Kingland and Beijing Compass

If you would invest (100.00) in Beijing Compass Technology on October 10, 2024 and sell it today you would earn a total of  100.00  from holding Beijing Compass Technology or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Zhejiang Kingland Pipeline  vs.  Beijing Compass Technology

Zhejiang Kingland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhejiang Kingland Pipeline 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.

Beijing Compass Tech

Risk-Adjusted Performance

0 of 100

Modest

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

Pair Trading with Zhejiang Kingland and Beijing Compass

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

The idea behind Zhejiang Kingland Pipeline and Beijing Compass 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.