Correlation Between Zhen Ding and Maxigen Biotech

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

By analyzing existing cross correlation between Zhen Ding Technology and Maxigen Biotech, you can compare the effects of market volatilities on Zhen Ding and Maxigen Biotech 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 Zhen Ding with a short position of Maxigen Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhen Ding and Maxigen Biotech.

Diversification Opportunities for Zhen Ding and Maxigen Biotech

0.36

Correlation Coefficient

Zhen Ding  Maxigen Biotech

Weak diversification

The 3 months correlation between Zhen and Maxigen is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Zhen Ding Technology and Maxigen Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxigen Biotech and Zhen Ding 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 Zhen Ding Technology are associated (or correlated) with Maxigen Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxigen Biotech has no effect on the direction of Zhen Ding i.e., Zhen Ding and Maxigen Biotech go up and down completely randomly.

Pair Corralation between Zhen Ding and Maxigen Biotech

Assuming the 90 days trading horizon Zhen Ding Technology is expected to generate 0.86 times more return on investment than Maxigen Biotech. However, Zhen Ding Technology is 1.16 times less risky than Maxigen Biotech. It trades about 0.02 of its potential returns per unit of risk. Maxigen Biotech is currently generating about -0.01 per unit of risk. If you would invest  11,250  in Zhen Ding Technology on October 27, 2024 and sell it today you would earn a total of  700.00  from holding Zhen Ding Technology or generate 6.22% return on investment over 90 days.

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

Zhen Ding Technology  vs.  Maxigen Biotech

Zhen Ding Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zhen Ding Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Zhen Ding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Maxigen Biotech

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maxigen Biotech are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Maxigen Biotech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhen Ding and Maxigen Biotech

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

The idea behind Zhen Ding Technology and Maxigen Biotech 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.