Correlation Between Sichuan Newsnet and Zhejiang Crystal

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

By analyzing existing cross correlation between Sichuan Newsnet Media and Zhejiang Crystal Optech, you can compare the effects of market volatilities on Sichuan Newsnet and Zhejiang Crystal 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 Sichuan Newsnet with a short position of Zhejiang Crystal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Newsnet and Zhejiang Crystal.

Diversification Opportunities for Sichuan Newsnet and Zhejiang Crystal

0.2

Correlation Coefficient

Sichuan Newsnet  Zhejiang Crystal

Modest diversification

The 3 months correlation between Sichuan and Zhejiang is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Newsnet Media and Zhejiang Crystal Optech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Crystal Optech and Sichuan Newsnet 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 Sichuan Newsnet Media are associated (or correlated) with Zhejiang Crystal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Crystal Optech has no effect on the direction of Sichuan Newsnet i.e., Sichuan Newsnet and Zhejiang Crystal go up and down completely randomly.

Pair Corralation between Sichuan Newsnet and Zhejiang Crystal

Assuming the 90 days trading horizon Sichuan Newsnet Media is expected to under-perform the Zhejiang Crystal. In addition to that, Sichuan Newsnet is 1.1 times more volatile than Zhejiang Crystal Optech. It trades about -0.05 of its total potential returns per unit of risk. Zhejiang Crystal Optech is currently generating about 0.06 per unit of volatility. If you would invest  1,927  in Zhejiang Crystal Optech on October 23, 2024 and sell it today you would earn a total of  184.00  from holding Zhejiang Crystal Optech or generate 9.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Sichuan Newsnet Media  vs.  Zhejiang Crystal Optech

Sichuan Newsnet Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sichuan Newsnet Media 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.

Zhejiang Crystal Optech

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Sichuan Newsnet and Zhejiang Crystal

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

The idea behind Sichuan Newsnet Media and Zhejiang Crystal Optech 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.