Correlation Between De Licacy and Zig Sheng

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

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

Diversification Opportunities for De Licacy and Zig Sheng

-0.5

Correlation Coefficient

De Licacy  Zig Sheng

Very good diversification

The 3 months correlation between 1464 and Zig is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding De Licacy Industrial and Zig Sheng Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zig Sheng Industrial and De Licacy 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 De Licacy Industrial are associated (or correlated) with Zig Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zig Sheng Industrial has no effect on the direction of De Licacy i.e., De Licacy and Zig Sheng go up and down completely randomly.

Pair Corralation between De Licacy and Zig Sheng

Assuming the 90 days trading horizon De Licacy Industrial is expected to under-perform the Zig Sheng. In addition to that, De Licacy is 1.76 times more volatile than Zig Sheng Industrial. It trades about -0.13 of its total potential returns per unit of risk. Zig Sheng Industrial is currently generating about -0.08 per unit of volatility. If you would invest  1,000.00  in Zig Sheng Industrial on October 7, 2024 and sell it today you would lose (24.00) from holding Zig Sheng Industrial or give up 2.4% of portfolio value over 90 days.

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

De Licacy Industrial  vs.  Zig Sheng Industrial

De Licacy Industrial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in De Licacy Industrial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, De Licacy showed solid returns over the last few months and may actually be approaching a breakup point.

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with De Licacy and Zig Sheng

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

The idea behind De Licacy Industrial and Zig Sheng Industrial 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.