Correlation Between Xizi Clean and Zhejiang Publishing

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

By analyzing existing cross correlation between Xizi Clean Energy and Zhejiang Publishing Media, you can compare the effects of market volatilities on Xizi Clean and Zhejiang Publishing 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 Xizi Clean with a short position of Zhejiang Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xizi Clean and Zhejiang Publishing.

Diversification Opportunities for Xizi Clean and Zhejiang Publishing

-0.09

Correlation Coefficient

Xizi Clean  Zhejiang Publishing

Good diversification

The 3 months correlation between Xizi and Zhejiang is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Xizi Clean Energy and Zhejiang Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Publishing Media and Xizi Clean 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 Xizi Clean Energy are associated (or correlated) with Zhejiang Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Publishing Media has no effect on the direction of Xizi Clean i.e., Xizi Clean and Zhejiang Publishing go up and down completely randomly.

Pair Corralation between Xizi Clean and Zhejiang Publishing

Assuming the 90 days trading horizon Xizi Clean Energy is expected to generate 0.88 times more return on investment than Zhejiang Publishing. However, Xizi Clean Energy is 1.13 times less risky than Zhejiang Publishing. It trades about -0.1 of its potential returns per unit of risk. Zhejiang Publishing Media is currently generating about -0.1 per unit of risk. If you would invest  1,237  in Xizi Clean Energy on October 7, 2024 and sell it today you would lose (187.00) from holding Xizi Clean Energy or give up 15.12% of portfolio value over 90 days.

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

Xizi Clean Energy  vs.  Zhejiang Publishing Media

Xizi Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xizi Clean Energy 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.

Zhejiang Publishing Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhejiang Publishing Media 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.

Pair Trading with Xizi Clean and Zhejiang Publishing

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

The idea behind Xizi Clean Energy and Zhejiang Publishing Media 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.