Correlation Between Zhonghong Pulin and Kingclean Electric

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

By analyzing existing cross correlation between Zhonghong Pulin Medical and Kingclean Electric Co, you can compare the effects of market volatilities on Zhonghong Pulin and Kingclean Electric 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 Zhonghong Pulin with a short position of Kingclean Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhonghong Pulin and Kingclean Electric.

Diversification Opportunities for Zhonghong Pulin and Kingclean Electric

-0.26

Correlation Coefficient

Zhonghong Pulin  Kingclean Electric

Very good diversification

The 3 months correlation between Zhonghong and Kingclean is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Zhonghong Pulin Medical and Kingclean Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingclean Electric and Zhonghong Pulin 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 Zhonghong Pulin Medical are associated (or correlated) with Kingclean Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingclean Electric has no effect on the direction of Zhonghong Pulin i.e., Zhonghong Pulin and Kingclean Electric go up and down completely randomly.

Pair Corralation between Zhonghong Pulin and Kingclean Electric

Assuming the 90 days trading horizon Zhonghong Pulin Medical is expected to under-perform the Kingclean Electric. But the stock apears to be less risky and, when comparing its historical volatility, Zhonghong Pulin Medical is 1.33 times less risky than Kingclean Electric. The stock trades about -0.07 of its potential returns per unit of risk. The Kingclean Electric Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,308  in Kingclean Electric Co on December 27, 2024 and sell it today you would earn a total of  497.00  from holding Kingclean Electric Co or generate 21.53% return on investment over 90 days.

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

Zhonghong Pulin Medical  vs.  Kingclean Electric Co

Zhonghong Pulin Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zhonghong Pulin Medical 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.

Kingclean Electric

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kingclean Electric Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kingclean Electric sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhonghong Pulin and Kingclean Electric

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

The idea behind Zhonghong Pulin Medical and Kingclean Electric Co 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.