Correlation Between Chenming Mold and Zinwell

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

By analyzing existing cross correlation between Chenming Mold Industrial and Zinwell, you can compare the effects of market volatilities on Chenming Mold and Zinwell 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 Chenming Mold with a short position of Zinwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chenming Mold and Zinwell.

Diversification Opportunities for Chenming Mold and Zinwell

0.41

Correlation Coefficient

Chenming Mold  Zinwell

Very weak diversification

The 3 months correlation between Chenming and Zinwell is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Chenming Mold Industrial and Zinwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinwell and Chenming Mold 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 Chenming Mold Industrial are associated (or correlated) with Zinwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinwell has no effect on the direction of Chenming Mold i.e., Chenming Mold and Zinwell go up and down completely randomly.

Pair Corralation between Chenming Mold and Zinwell

Assuming the 90 days trading horizon Chenming Mold Industrial is expected to generate 1.76 times more return on investment than Zinwell. However, Chenming Mold is 1.76 times more volatile than Zinwell. It trades about 0.02 of its potential returns per unit of risk. Zinwell is currently generating about -0.37 per unit of risk. If you would invest  14,400  in Chenming Mold Industrial on October 6, 2024 and sell it today you would earn a total of  100.00  from holding Chenming Mold Industrial or generate 0.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Chenming Mold Industrial  vs.  Zinwell

Chenming Mold Industrial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chenming Mold Industrial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chenming Mold showed solid returns over the last few months and may actually be approaching a breakup point.

Zinwell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zinwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Chenming Mold and Zinwell

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

The idea behind Chenming Mold Industrial and Zinwell 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.