Correlation Between Handok Clean and Zinus

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

By analyzing existing cross correlation between Handok Clean Tech and Zinus Inc, you can compare the effects of market volatilities on Handok Clean and Zinus 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 Handok Clean with a short position of Zinus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Handok Clean and Zinus.

Diversification Opportunities for Handok Clean and Zinus

0.28

Correlation Coefficient

Handok Clean  Zinus

Modest diversification

The 3 months correlation between Handok and Zinus is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Handok Clean Tech and Zinus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinus Inc and Handok Clean 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 Handok Clean Tech are associated (or correlated) with Zinus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinus Inc has no effect on the direction of Handok Clean i.e., Handok Clean and Zinus go up and down completely randomly.

Pair Corralation between Handok Clean and Zinus

Assuming the 90 days trading horizon Handok Clean is expected to generate 3.57 times less return on investment than Zinus. But when comparing it to its historical volatility, Handok Clean Tech is 2.53 times less risky than Zinus. It trades about 0.05 of its potential returns per unit of risk. Zinus Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,947,000  in Zinus Inc on October 26, 2024 and sell it today you would earn a total of  173,000  from holding Zinus Inc or generate 8.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Handok Clean Tech  vs.  Zinus Inc

Handok Clean Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Handok Clean Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Handok Clean is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zinus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zinus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Zinus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Handok Clean and Zinus

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

The idea behind Handok Clean Tech and Zinus Inc 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.