Correlation Between Zhongsheng Group and CODERE ONLINE

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

Diversification Opportunities for Zhongsheng Group and CODERE ONLINE

-0.28

Correlation Coefficient

Zhongsheng Group  CODERE ONLINE

Very good diversification

The 3 months correlation between Zhongsheng and CODERE is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Zhongsheng Group Holdings and CODERE ONLINE LUX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CODERE ONLINE LUX 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 CODERE ONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CODERE ONLINE LUX has no effect on the direction of Zhongsheng Group i.e., Zhongsheng Group and CODERE ONLINE go up and down completely randomly.

Pair Corralation between Zhongsheng Group and CODERE ONLINE

Assuming the 90 days horizon Zhongsheng Group is expected to generate 1.92 times less return on investment than CODERE ONLINE. In addition to that, Zhongsheng Group is 1.42 times more volatile than CODERE ONLINE LUX. It trades about 0.02 of its total potential returns per unit of risk. CODERE ONLINE LUX is currently generating about 0.06 per unit of volatility. If you would invest  266.00  in CODERE ONLINE LUX on September 29, 2024 and sell it today you would earn a total of  394.00  from holding CODERE ONLINE LUX or generate 148.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Zhongsheng Group Holdings  vs.  CODERE ONLINE LUX

Zhongsheng Group Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongsheng Group Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Zhongsheng Group reported solid returns over the last few months and may actually be approaching a breakup point.

CODERE ONLINE LUX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CODERE ONLINE LUX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CODERE ONLINE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Zhongsheng Group and CODERE ONLINE

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

The idea behind Zhongsheng Group Holdings and CODERE ONLINE LUX 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.