Correlation Between Zhen Ding and Chipbond Technology

Can any of the company-specific risk be diversified away by investing in both Zhen Ding and Chipbond Technology 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 Chipbond Technology 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 Chipbond Technology, you can compare the effects of market volatilities on Zhen Ding and Chipbond Technology 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 Chipbond Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhen Ding and Chipbond Technology.

Diversification Opportunities for Zhen Ding and Chipbond Technology

0.05

Correlation Coefficient

Zhen Ding  Chipbond Technology

Significant diversification

The 3 months correlation between Zhen and Chipbond is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Zhen Ding Technology and Chipbond Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chipbond Technology 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 Chipbond Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chipbond Technology has no effect on the direction of Zhen Ding i.e., Zhen Ding and Chipbond Technology go up and down completely randomly.

Pair Corralation between Zhen Ding and Chipbond Technology

Assuming the 90 days trading horizon Zhen Ding Technology is expected to generate 1.28 times more return on investment than Chipbond Technology. However, Zhen Ding is 1.28 times more volatile than Chipbond Technology. It trades about 0.15 of its potential returns per unit of risk. Chipbond Technology is currently generating about -0.02 per unit of risk. If you would invest  10,850  in Zhen Ding Technology on October 7, 2024 and sell it today you would earn a total of  1,200  from holding Zhen Ding Technology or generate 11.06% return on investment over 90 days.

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

Zhen Ding Technology  vs.  Chipbond Technology

Zhen Ding Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zhen Ding Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Zhen Ding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Chipbond Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chipbond Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Chipbond Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Zhen Ding and Chipbond Technology

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

The idea behind Zhen Ding Technology and Chipbond Technology 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.