Correlation Between Zhongsheng Group and DIeteren Group

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

By analyzing existing cross correlation between Zhongsheng Group Holdings and DIeteren Group SA, you can compare the effects of market volatilities on Zhongsheng Group and DIeteren Group 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 Zhongsheng Group with a short position of DIeteren Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongsheng Group and DIeteren Group.

Diversification Opportunities for Zhongsheng Group and DIeteren Group

0.38

Correlation Coefficient

Zhongsheng Group  DIeteren Group

Weak diversification

The 3 months correlation between Zhongsheng and DIeteren is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Zhongsheng Group Holdings and DIeteren Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIeteren Group SA and Zhongsheng Group 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 Zhongsheng Group Holdings are associated (or correlated) with DIeteren Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIeteren Group SA has no effect on the direction of Zhongsheng Group i.e., Zhongsheng Group and DIeteren Group go up and down completely randomly.

Pair Corralation between Zhongsheng Group and DIeteren Group

Assuming the 90 days horizon Zhongsheng Group Holdings is expected to generate 1.82 times more return on investment than DIeteren Group. However, Zhongsheng Group is 1.82 times more volatile than DIeteren Group SA. It trades about 0.13 of its potential returns per unit of risk. DIeteren Group SA is currently generating about 0.18 per unit of risk. If you would invest  138.00  in Zhongsheng Group Holdings on September 22, 2024 and sell it today you would earn a total of  44.00  from holding Zhongsheng Group Holdings or generate 31.88% return on investment over 90 days.

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

Zhongsheng Group Holdings  vs.  DIeteren Group SA

Zhongsheng Group Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongsheng Group Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Zhongsheng Group reported solid returns over the last few months and may actually be approaching a breakup point.

DIeteren Group SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DIeteren Group SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, DIeteren Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhongsheng Group and DIeteren Group

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

The idea behind Zhongsheng Group Holdings and DIeteren Group SA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.