Correlation Between XiAn Dagang and Zhengping RoadBridge

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

By analyzing existing cross correlation between XiAn Dagang Road and Zhengping RoadBridge Constr, you can compare the effects of market volatilities on XiAn Dagang and Zhengping RoadBridge 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 XiAn Dagang with a short position of Zhengping RoadBridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of XiAn Dagang and Zhengping RoadBridge.

Diversification Opportunities for XiAn Dagang and Zhengping RoadBridge

-0.16

Correlation Coefficient

XiAn Dagang  Zhengping RoadBridge

Good diversification

The 3 months correlation between XiAn and Zhengping is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding XiAn Dagang Road and Zhengping RoadBridge Constr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhengping RoadBridge and XiAn Dagang 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 XiAn Dagang Road are associated (or correlated) with Zhengping RoadBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhengping RoadBridge has no effect on the direction of XiAn Dagang i.e., XiAn Dagang and Zhengping RoadBridge go up and down completely randomly.

Pair Corralation between XiAn Dagang and Zhengping RoadBridge

Assuming the 90 days trading horizon XiAn Dagang Road is expected to generate 1.13 times more return on investment than Zhengping RoadBridge. However, XiAn Dagang is 1.13 times more volatile than Zhengping RoadBridge Constr. It trades about 0.02 of its potential returns per unit of risk. Zhengping RoadBridge Constr is currently generating about 0.02 per unit of risk. If you would invest  629.00  in XiAn Dagang Road on October 9, 2024 and sell it today you would lose (35.00) from holding XiAn Dagang Road or give up 5.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.58%
Values	Daily Returns

XiAn Dagang Road  vs.  Zhengping RoadBridge Constr

XiAn Dagang Road

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XiAn Dagang Road has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Zhengping RoadBridge

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zhengping RoadBridge Constr are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhengping RoadBridge sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XiAn Dagang and Zhengping RoadBridge

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

The idea behind XiAn Dagang Road and Zhengping RoadBridge Constr 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.