Correlation Between Contemporary Amperex and Hangzhou Zhongya

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

By analyzing existing cross correlation between Contemporary Amperex Technology and Hangzhou Zhongya Machinery, you can compare the effects of market volatilities on Contemporary Amperex and Hangzhou Zhongya 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 Contemporary Amperex with a short position of Hangzhou Zhongya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contemporary Amperex and Hangzhou Zhongya.

Diversification Opportunities for Contemporary Amperex and Hangzhou Zhongya

0.57

Correlation Coefficient

Contemporary Amperex  Hangzhou Zhongya

Very weak diversification

The 3 months correlation between Contemporary and Hangzhou is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Contemporary Amperex Technolog and Hangzhou Zhongya Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou Zhongya Mac and Contemporary Amperex 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 Contemporary Amperex Technology are associated (or correlated) with Hangzhou Zhongya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou Zhongya Mac has no effect on the direction of Contemporary Amperex i.e., Contemporary Amperex and Hangzhou Zhongya go up and down completely randomly.

Pair Corralation between Contemporary Amperex and Hangzhou Zhongya

Assuming the 90 days trading horizon Contemporary Amperex Technology is expected to generate 0.75 times more return on investment than Hangzhou Zhongya. However, Contemporary Amperex Technology is 1.33 times less risky than Hangzhou Zhongya. It trades about 0.03 of its potential returns per unit of risk. Hangzhou Zhongya Machinery is currently generating about -0.03 per unit of risk. If you would invest  26,350  in Contemporary Amperex Technology on October 23, 2024 and sell it today you would earn a total of  202.00  from holding Contemporary Amperex Technology or generate 0.77% return on investment over 90 days.

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

Contemporary Amperex Technolog  vs.  Hangzhou Zhongya Machinery

Contemporary Amperex

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Contemporary Amperex Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Contemporary Amperex may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hangzhou Zhongya Mac

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Contemporary Amperex and Hangzhou Zhongya

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

The idea behind Contemporary Amperex Technology and Hangzhou Zhongya Machinery 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.