Correlation Between Iat Automobile and Zhengzhou Coal

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

By analyzing existing cross correlation between Iat Automobile Technology and Zhengzhou Coal Mining, you can compare the effects of market volatilities on Iat Automobile and Zhengzhou Coal 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 Iat Automobile with a short position of Zhengzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iat Automobile and Zhengzhou Coal.

Diversification Opportunities for Iat Automobile and Zhengzhou Coal

0.64

Correlation Coefficient

Iat Automobile  Zhengzhou Coal

Poor diversification

The 3 months correlation between Iat and Zhengzhou is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Iat Automobile Technology and Zhengzhou Coal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhengzhou Coal Mining and Iat Automobile 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 Iat Automobile Technology are associated (or correlated) with Zhengzhou Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhengzhou Coal Mining has no effect on the direction of Iat Automobile i.e., Iat Automobile and Zhengzhou Coal go up and down completely randomly.

Pair Corralation between Iat Automobile and Zhengzhou Coal

Assuming the 90 days trading horizon Iat Automobile is expected to generate 11.47 times less return on investment than Zhengzhou Coal. In addition to that, Iat Automobile is 1.51 times more volatile than Zhengzhou Coal Mining. It trades about 0.01 of its total potential returns per unit of risk. Zhengzhou Coal Mining is currently generating about 0.13 per unit of volatility. If you would invest  1,318  in Zhengzhou Coal Mining on December 30, 2024 and sell it today you would earn a total of  199.00  from holding Zhengzhou Coal Mining or generate 15.1% return on investment over 90 days.

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

Iat Automobile Technology  vs.  Zhengzhou Coal Mining

Iat Automobile Technology

Risk-Adjusted Performance

Very Weak

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

Zhengzhou Coal Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zhengzhou Coal Mining are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhengzhou Coal sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iat Automobile and Zhengzhou Coal

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

The idea behind Iat Automobile Technology and Zhengzhou Coal Mining 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.