Correlation Between Zig Sheng and Lealea Enterprise

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

By analyzing existing cross correlation between Zig Sheng Industrial and Lealea Enterprise Co, you can compare the effects of market volatilities on Zig Sheng and Lealea Enterprise 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 Zig Sheng with a short position of Lealea Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zig Sheng and Lealea Enterprise.

Diversification Opportunities for Zig Sheng and Lealea Enterprise

0.49

Correlation Coefficient

Zig Sheng  Lealea Enterprise

Very weak diversification

The 3 months correlation between Zig and Lealea is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Zig Sheng Industrial and Lealea Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lealea Enterprise and Zig Sheng 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 Zig Sheng Industrial are associated (or correlated) with Lealea Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lealea Enterprise has no effect on the direction of Zig Sheng i.e., Zig Sheng and Lealea Enterprise go up and down completely randomly.

Pair Corralation between Zig Sheng and Lealea Enterprise

Assuming the 90 days trading horizon Zig Sheng Industrial is expected to under-perform the Lealea Enterprise. In addition to that, Zig Sheng is 1.05 times more volatile than Lealea Enterprise Co. It trades about -0.22 of its total potential returns per unit of risk. Lealea Enterprise Co is currently generating about -0.01 per unit of volatility. If you would invest  929.00  in Lealea Enterprise Co on September 16, 2024 and sell it today you would lose (11.00) from holding Lealea Enterprise Co or give up 1.18% of portfolio value over 90 days.

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

Zig Sheng Industrial  vs.  Lealea Enterprise Co

Zig Sheng Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zig Sheng Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Lealea Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lealea Enterprise Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lealea Enterprise is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Zig Sheng and Lealea Enterprise

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

The idea behind Zig Sheng Industrial and Lealea Enterprise 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.