Correlation Between CSG Holding and Zhuzhou CRRC

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

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

Diversification Opportunities for CSG Holding and Zhuzhou CRRC

0.78

Correlation Coefficient

CSG Holding  Zhuzhou CRRC

Poor diversification

The 3 months correlation between CSG and Zhuzhou is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding CSG Holding 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 CSG Holding 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 CSG Holding 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 CSG Holding i.e., CSG Holding and Zhuzhou CRRC go up and down completely randomly.

Pair Corralation between CSG Holding and Zhuzhou CRRC

Assuming the 90 days trading horizon CSG Holding is expected to generate 3.84 times less return on investment than Zhuzhou CRRC. But when comparing it to its historical volatility, CSG Holding Co is 2.29 times less risky than Zhuzhou CRRC. It trades about 0.04 of its potential returns per unit of risk. Zhuzhou CRRC Times is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,262  in Zhuzhou CRRC Times on September 22, 2024 and sell it today you would earn a total of  468.00  from holding Zhuzhou CRRC Times or generate 10.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

CSG Holding Co  vs.  Zhuzhou CRRC Times

CSG Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CSG Holding Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CSG Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zhuzhou CRRC Times

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with CSG Holding and Zhuzhou CRRC

The main advantage of trading using opposite CSG Holding and Zhuzhou CRRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSG Holding 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 CSG Holding 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.