Correlation Between Zhen Ding and Xinhua Winshare

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

Diversification Opportunities for Zhen Ding and Xinhua Winshare

0.51

Correlation Coefficient

Zhen Ding  Xinhua Winshare

Very weak diversification

The 3 months correlation between Zhen and Xinhua is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Zhen Ding Technology and Xinhua Winshare Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinhua Winshare Publ 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 Xinhua Winshare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinhua Winshare Publ has no effect on the direction of Zhen Ding i.e., Zhen Ding and Xinhua Winshare go up and down completely randomly.

Pair Corralation between Zhen Ding and Xinhua Winshare

Assuming the 90 days trading horizon Zhen Ding is expected to generate 20.51 times less return on investment than Xinhua Winshare. But when comparing it to its historical volatility, Zhen Ding Technology is 2.61 times less risky than Xinhua Winshare. It trades about 0.01 of its potential returns per unit of risk. Xinhua Winshare Publishing is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Xinhua Winshare Publishing on October 23, 2024 and sell it today you would earn a total of  118.00  from holding Xinhua Winshare Publishing or generate 907.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.4%
Values	Daily Returns

Zhen Ding Technology  vs.  Xinhua Winshare Publishing

Zhen Ding Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhen Ding Technology has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Xinhua Winshare Publ

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xinhua Winshare Publishing are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Xinhua Winshare may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Zhen Ding and Xinhua Winshare

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

The idea behind Zhen Ding Technology and Xinhua Winshare Publishing 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.