Correlation Between Rongcheer Industrial and Zhongrun Resources

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Rongcheer Industrial and Zhongrun Resources 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 Rongcheer Industrial and Zhongrun Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rongcheer Industrial Technology and Zhongrun Resources Investment, you can compare the effects of market volatilities on Rongcheer Industrial and Zhongrun Resources 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 Rongcheer Industrial with a short position of Zhongrun Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rongcheer Industrial and Zhongrun Resources.

Diversification Opportunities for Rongcheer Industrial and Zhongrun Resources

0.64
  Correlation Coefficient

Poor diversification

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

Pair Corralation between Rongcheer Industrial and Zhongrun Resources

Assuming the 90 days trading horizon Rongcheer Industrial is expected to generate 2.85 times less return on investment than Zhongrun Resources. In addition to that, Rongcheer Industrial is 1.25 times more volatile than Zhongrun Resources Investment. It trades about 0.13 of its total potential returns per unit of risk. Zhongrun Resources Investment is currently generating about 0.46 per unit of volatility. If you would invest  133.00  in Zhongrun Resources Investment on September 22, 2024 and sell it today you would earn a total of  226.00  from holding Zhongrun Resources Investment or generate 169.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.33%
ValuesDaily Returns

Rongcheer Industrial Technolog  vs.  Zhongrun Resources Investment

 Performance 
       Timeline  
Rongcheer Industrial 

Risk-Adjusted Performance

10 of 100

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

Risk-Adjusted Performance

36 of 100

 
Weak
 
Strong
Very Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Zhongrun Resources Investment are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhongrun Resources sustained solid returns over the last few months and may actually be approaching a breakup point.

Rongcheer Industrial and Zhongrun Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rongcheer Industrial and Zhongrun Resources

The main advantage of trading using opposite Rongcheer Industrial and Zhongrun Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rongcheer Industrial position performs unexpectedly, Zhongrun Resources 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 Zhongrun Resources will offset losses from the drop in Zhongrun Resources' long position.
The idea behind Rongcheer Industrial Technology and Zhongrun Resources Investment 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.
Check out your portfolio center.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

Other Complementary Tools

Equity Valuation
Check real value of public entities based on technical and fundamental data
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments