Correlation Between Runjian Communication and Zhuzhou CRRC

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

By analyzing existing cross correlation between Runjian Communication Co and Zhuzhou CRRC Times, you can compare the effects of market volatilities on Runjian Communication and Zhuzhou CRRC 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 Runjian Communication with a short position of Zhuzhou CRRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Runjian Communication and Zhuzhou CRRC.

Diversification Opportunities for Runjian Communication and Zhuzhou CRRC

0.55

Correlation Coefficient

Runjian Communication  Zhuzhou CRRC

Very weak diversification

The 3 months correlation between Runjian and Zhuzhou is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Runjian Communication Co and Zhuzhou CRRC Times in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhuzhou CRRC Times and Runjian Communication 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 Runjian Communication Co are associated (or correlated) with Zhuzhou CRRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhuzhou CRRC Times has no effect on the direction of Runjian Communication i.e., Runjian Communication and Zhuzhou CRRC go up and down completely randomly.

Pair Corralation between Runjian Communication and Zhuzhou CRRC

Assuming the 90 days trading horizon Runjian Communication Co is expected to generate 0.89 times more return on investment than Zhuzhou CRRC. However, Runjian Communication Co is 1.12 times less risky than Zhuzhou CRRC. It trades about 0.07 of its potential returns per unit of risk. Zhuzhou CRRC Times is currently generating about 0.01 per unit of risk. If you would invest  2,943  in Runjian Communication Co on September 27, 2024 and sell it today you would earn a total of  358.00  from holding Runjian Communication Co or generate 12.16% return on investment over 90 days.

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

Runjian Communication Co  vs.  Zhuzhou CRRC Times

Runjian Communication

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Runjian Communication Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Runjian Communication sustained solid returns over the last few months and may actually be approaching a breakup point.

Zhuzhou CRRC Times

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Runjian Communication and Zhuzhou CRRC

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

The idea behind Runjian Communication Co and Zhuzhou CRRC Times 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 Transaction History module to view history of all your transactions and understand their impact on performance.