Correlation Between Changzhou Almaden and Zhuhai Comleader

Can any of the company-specific risk be diversified away by investing in both Changzhou Almaden and Zhuhai Comleader 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 Changzhou Almaden and Zhuhai Comleader into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Changzhou Almaden Co and Zhuhai Comleader Information, you can compare the effects of market volatilities on Changzhou Almaden and Zhuhai Comleader 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 Changzhou Almaden with a short position of Zhuhai Comleader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changzhou Almaden and Zhuhai Comleader.

Diversification Opportunities for Changzhou Almaden and Zhuhai Comleader

0.45

Correlation Coefficient

Changzhou Almaden  Zhuhai Comleader

Very weak diversification

The 3 months correlation between Changzhou and Zhuhai is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Changzhou Almaden Co and Zhuhai Comleader Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhuhai Comleader Inf and Changzhou Almaden 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 Changzhou Almaden Co are associated (or correlated) with Zhuhai Comleader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhuhai Comleader Inf has no effect on the direction of Changzhou Almaden i.e., Changzhou Almaden and Zhuhai Comleader go up and down completely randomly.

Pair Corralation between Changzhou Almaden and Zhuhai Comleader

Assuming the 90 days trading horizon Changzhou Almaden Co is expected to under-perform the Zhuhai Comleader. But the stock apears to be less risky and, when comparing its historical volatility, Changzhou Almaden Co is 1.38 times less risky than Zhuhai Comleader. The stock trades about -0.04 of its potential returns per unit of risk. The Zhuhai Comleader Information is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,802  in Zhuhai Comleader Information on December 27, 2024 and sell it today you would lose (60.00) from holding Zhuhai Comleader Information or give up 3.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

Changzhou Almaden Co  vs.  Zhuhai Comleader Information

Changzhou Almaden

Risk-Adjusted Performance

Very Weak

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

Zhuhai Comleader Inf

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Changzhou Almaden and Zhuhai Comleader

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

The idea behind Changzhou Almaden Co and Zhuhai Comleader Information 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.