Correlation Between Zig Sheng and Acelon Chemicals

Can any of the company-specific risk be diversified away by investing in both Zig Sheng and Acelon Chemicals 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 Acelon Chemicals 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 Acelon Chemicals Fiber, you can compare the effects of market volatilities on Zig Sheng and Acelon Chemicals 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 Acelon Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zig Sheng and Acelon Chemicals.

Diversification Opportunities for Zig Sheng and Acelon Chemicals

0.38

Correlation Coefficient

Zig Sheng  Acelon Chemicals

Weak diversification

The 3 months correlation between Zig and Acelon is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Zig Sheng Industrial and Acelon Chemicals Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acelon Chemicals Fiber 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 Acelon Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acelon Chemicals Fiber has no effect on the direction of Zig Sheng i.e., Zig Sheng and Acelon Chemicals go up and down completely randomly.

Pair Corralation between Zig Sheng and Acelon Chemicals

Assuming the 90 days trading horizon Zig Sheng Industrial is expected to under-perform the Acelon Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, Zig Sheng Industrial is 2.27 times less risky than Acelon Chemicals. The stock trades about -0.05 of its potential returns per unit of risk. The Acelon Chemicals Fiber is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,195  in Acelon Chemicals Fiber on December 29, 2024 and sell it today you would earn a total of  490.00  from holding Acelon Chemicals Fiber or generate 41.0% return on investment over 90 days.

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

Zig Sheng Industrial  vs.  Acelon Chemicals Fiber

Zig Sheng Industrial

Risk-Adjusted Performance

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 fairly stable basic indicators, Zig Sheng is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Acelon Chemicals Fiber

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Acelon Chemicals Fiber are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Acelon Chemicals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zig Sheng and Acelon Chemicals

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

The idea behind Zig Sheng Industrial and Acelon Chemicals Fiber 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.