Correlation Between Zhejiang Yayi and Sany Heavy

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Can any of the company-specific risk be diversified away by investing in both Zhejiang Yayi and Sany Heavy 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 Zhejiang Yayi and Sany Heavy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zhejiang Yayi Metal and Sany Heavy Energy, you can compare the effects of market volatilities on Zhejiang Yayi and Sany Heavy 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 Zhejiang Yayi with a short position of Sany Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Yayi and Sany Heavy.

Diversification Opportunities for Zhejiang Yayi and Sany Heavy

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Zhejiang and Sany is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Yayi Metal and Sany Heavy Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sany Heavy Energy and Zhejiang Yayi 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 Zhejiang Yayi Metal are associated (or correlated) with Sany Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sany Heavy Energy has no effect on the direction of Zhejiang Yayi i.e., Zhejiang Yayi and Sany Heavy go up and down completely randomly.

Pair Corralation between Zhejiang Yayi and Sany Heavy

Assuming the 90 days trading horizon Zhejiang Yayi Metal is expected to generate 1.76 times more return on investment than Sany Heavy. However, Zhejiang Yayi is 1.76 times more volatile than Sany Heavy Energy. It trades about 0.01 of its potential returns per unit of risk. Sany Heavy Energy is currently generating about 0.01 per unit of risk. If you would invest  2,773  in Zhejiang Yayi Metal on October 3, 2024 and sell it today you would lose (435.00) from holding Zhejiang Yayi Metal or give up 15.69% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Zhejiang Yayi Metal  vs.  Sany Heavy Energy

 Performance 
       Timeline  
Zhejiang Yayi Metal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Zhejiang Yayi Metal 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.
Sany Heavy Energy 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Sany Heavy Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sany Heavy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zhejiang Yayi and Sany Heavy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zhejiang Yayi and Sany Heavy

The main advantage of trading using opposite Zhejiang Yayi and Sany Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhejiang Yayi position performs unexpectedly, Sany Heavy 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 Sany Heavy will offset losses from the drop in Sany Heavy's long position.
The idea behind Zhejiang Yayi Metal and Sany Heavy Energy 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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