Correlation Between Zhejiang Kingland and Xinjiang Baodi

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

Diversification Opportunities for Zhejiang Kingland and Xinjiang Baodi

0.1

Correlation Coefficient

Zhejiang Kingland  Xinjiang Baodi

Average diversification

The 3 months correlation between Zhejiang and Xinjiang is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Kingland Pipeline and Xinjiang Baodi Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Baodi Mining 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 Xinjiang Baodi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Baodi Mining has no effect on the direction of Zhejiang Kingland i.e., Zhejiang Kingland and Xinjiang Baodi go up and down completely randomly.

Pair Corralation between Zhejiang Kingland and Xinjiang Baodi

Assuming the 90 days trading horizon Zhejiang Kingland Pipeline is expected to generate 0.47 times more return on investment than Xinjiang Baodi. However, Zhejiang Kingland Pipeline is 2.11 times less risky than Xinjiang Baodi. It trades about 0.09 of its potential returns per unit of risk. Xinjiang Baodi Mining is currently generating about -0.05 per unit of risk. If you would invest  600.00  in Zhejiang Kingland Pipeline on December 27, 2024 and sell it today you would earn a total of  27.00  from holding Zhejiang Kingland Pipeline or generate 4.5% return on investment over 90 days.

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

Zhejiang Kingland Pipeline  vs.  Xinjiang Baodi Mining

Zhejiang Kingland

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Kingland Pipeline are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zhejiang Kingland is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Xinjiang Baodi Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xinjiang Baodi Mining 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.

Pair Trading with Zhejiang Kingland and Xinjiang Baodi

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

The idea behind Zhejiang Kingland Pipeline and Xinjiang Baodi Mining 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..