Correlation Between Zinwell and Chong Hong

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

By analyzing existing cross correlation between Zinwell and Chong Hong Construction, you can compare the effects of market volatilities on Zinwell and Chong Hong 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 Zinwell with a short position of Chong Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zinwell and Chong Hong.

Diversification Opportunities for Zinwell and Chong Hong

0.35

Correlation Coefficient

Zinwell  Chong Hong

Weak diversification

The 3 months correlation between Zinwell and Chong is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Zinwell and Chong Hong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chong Hong Construction and Zinwell 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 Zinwell are associated (or correlated) with Chong Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chong Hong Construction has no effect on the direction of Zinwell i.e., Zinwell and Chong Hong go up and down completely randomly.

Pair Corralation between Zinwell and Chong Hong

Assuming the 90 days trading horizon Zinwell is expected to generate 7.54 times less return on investment than Chong Hong. In addition to that, Zinwell is 1.02 times more volatile than Chong Hong Construction. It trades about 0.03 of its total potential returns per unit of risk. Chong Hong Construction is currently generating about 0.19 per unit of volatility. If you would invest  8,650  in Chong Hong Construction on December 2, 2024 and sell it today you would earn a total of  970.00  from holding Chong Hong Construction or generate 11.21% return on investment over 90 days.

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

Zinwell  vs.  Chong Hong Construction

Zinwell

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zinwell 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.

Chong Hong Construction

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chong Hong Construction are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chong Hong may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Zinwell and Chong Hong

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

The idea behind Zinwell and Chong Hong Construction 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.