Correlation Between Guangdong Shenglu and Zangge Holding

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

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

Diversification Opportunities for Guangdong Shenglu and Zangge Holding

0.54

Correlation Coefficient

Guangdong Shenglu  Zangge Holding

Very weak diversification

The 3 months correlation between Guangdong and Zangge is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Shenglu Telecommunic and Zangge Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zangge Holding and Guangdong Shenglu 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 Shenglu Telecommunication are associated (or correlated) with Zangge Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zangge Holding has no effect on the direction of Guangdong Shenglu i.e., Guangdong Shenglu and Zangge Holding go up and down completely randomly.

Pair Corralation between Guangdong Shenglu and Zangge Holding

Assuming the 90 days trading horizon Guangdong Shenglu Telecommunication is expected to under-perform the Zangge Holding. In addition to that, Guangdong Shenglu is 1.39 times more volatile than Zangge Holding Co. It trades about -0.36 of its total potential returns per unit of risk. Zangge Holding Co is currently generating about 0.18 per unit of volatility. If you would invest  2,768  in Zangge Holding Co on October 14, 2024 and sell it today you would earn a total of  182.00  from holding Zangge Holding Co or generate 6.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Guangdong Shenglu Telecommunic  vs.  Zangge Holding Co

Guangdong Shenglu

Risk-Adjusted Performance

0 of 100

Very Weak

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

Zangge Holding

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zangge Holding Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zangge Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Guangdong Shenglu and Zangge Holding

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

The idea behind Guangdong Shenglu Telecommunication and Zangge Holding 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.