Correlation Between Shenzhen Zhongzhuang and Metallurgical

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

By analyzing existing cross correlation between Shenzhen Zhongzhuang Construction and Metallurgical of, you can compare the effects of market volatilities on Shenzhen Zhongzhuang and Metallurgical 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 Shenzhen Zhongzhuang with a short position of Metallurgical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Zhongzhuang and Metallurgical.

Diversification Opportunities for Shenzhen Zhongzhuang and Metallurgical

0.21

Correlation Coefficient

Shenzhen Zhongzhuang  Metallurgical

Modest diversification

The 3 months correlation between Shenzhen and Metallurgical is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Zhongzhuang Construct and Metallurgical of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metallurgical and Shenzhen Zhongzhuang 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 Shenzhen Zhongzhuang Construction are associated (or correlated) with Metallurgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metallurgical has no effect on the direction of Shenzhen Zhongzhuang i.e., Shenzhen Zhongzhuang and Metallurgical go up and down completely randomly.

Pair Corralation between Shenzhen Zhongzhuang and Metallurgical

Assuming the 90 days trading horizon Shenzhen Zhongzhuang is expected to generate 2.61 times less return on investment than Metallurgical. In addition to that, Shenzhen Zhongzhuang is 1.89 times more volatile than Metallurgical of. It trades about 0.0 of its total potential returns per unit of risk. Metallurgical of is currently generating about 0.02 per unit of volatility. If you would invest  302.00  in Metallurgical of on October 6, 2024 and sell it today you would earn a total of  11.00  from holding Metallurgical of or generate 3.64% return on investment over 90 days.

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

Shenzhen Zhongzhuang Construct  vs.  Metallurgical of

Shenzhen Zhongzhuang

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Zhongzhuang Construction are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Zhongzhuang sustained solid returns over the last few months and may actually be approaching a breakup point.

Metallurgical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metallurgical of 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 Shenzhen Zhongzhuang and Metallurgical

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

The idea behind Shenzhen Zhongzhuang Construction and Metallurgical of 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..