Correlation Between KAUFMAN ET and ZIJIN MINH

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

By analyzing existing cross correlation between KAUFMAN ET BROAD and ZIJIN MINH UNSPADR20, you can compare the effects of market volatilities on KAUFMAN ET and ZIJIN MINH 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 KAUFMAN ET with a short position of ZIJIN MINH. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and ZIJIN MINH.

Diversification Opportunities for KAUFMAN ET and ZIJIN MINH

0.17

Correlation Coefficient

KAUFMAN ET  ZIJIN MINH

Average diversification

The 3 months correlation between KAUFMAN and ZIJIN is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD and ZIJIN MINH UNSPADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIJIN MINH UNSPADR20 and KAUFMAN ET 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 KAUFMAN ET BROAD are associated (or correlated) with ZIJIN MINH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIJIN MINH UNSPADR20 has no effect on the direction of KAUFMAN ET i.e., KAUFMAN ET and ZIJIN MINH go up and down completely randomly.

Pair Corralation between KAUFMAN ET and ZIJIN MINH

Assuming the 90 days trading horizon KAUFMAN ET BROAD is expected to generate 0.68 times more return on investment than ZIJIN MINH. However, KAUFMAN ET BROAD is 1.48 times less risky than ZIJIN MINH. It trades about 0.06 of its potential returns per unit of risk. ZIJIN MINH UNSPADR20 is currently generating about 0.04 per unit of risk. If you would invest  2,233  in KAUFMAN ET BROAD on October 4, 2024 and sell it today you would earn a total of  942.00  from holding KAUFMAN ET BROAD or generate 42.19% return on investment over 90 days.

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

KAUFMAN ET BROAD  vs.  ZIJIN MINH UNSPADR20

KAUFMAN ET BROAD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KAUFMAN ET BROAD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, KAUFMAN ET is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

ZIJIN MINH UNSPADR20

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZIJIN MINH UNSPADR20 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with KAUFMAN ET and ZIJIN MINH

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

The idea behind KAUFMAN ET BROAD and ZIJIN MINH UNSPADR20 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.