Correlation Between Zhangzhou Pientzehuang and Xiamen ITG

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

By analyzing existing cross correlation between Zhangzhou Pientzehuang Pharmaceutical and Xiamen ITG Group, you can compare the effects of market volatilities on Zhangzhou Pientzehuang and Xiamen ITG 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 Zhangzhou Pientzehuang with a short position of Xiamen ITG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhangzhou Pientzehuang and Xiamen ITG.

Diversification Opportunities for Zhangzhou Pientzehuang and Xiamen ITG

0.74

Correlation Coefficient

Zhangzhou Pientzehuang  Xiamen ITG

Poor diversification

The 3 months correlation between Zhangzhou and Xiamen is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Zhangzhou Pientzehuang Pharmac and Xiamen ITG Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen ITG Group and Zhangzhou Pientzehuang 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 Zhangzhou Pientzehuang Pharmaceutical are associated (or correlated) with Xiamen ITG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen ITG Group has no effect on the direction of Zhangzhou Pientzehuang i.e., Zhangzhou Pientzehuang and Xiamen ITG go up and down completely randomly.

Pair Corralation between Zhangzhou Pientzehuang and Xiamen ITG

Assuming the 90 days trading horizon Zhangzhou Pientzehuang is expected to generate 1.21 times less return on investment than Xiamen ITG. In addition to that, Zhangzhou Pientzehuang is 1.08 times more volatile than Xiamen ITG Group. It trades about 0.08 of its total potential returns per unit of risk. Xiamen ITG Group is currently generating about 0.1 per unit of volatility. If you would invest  578.00  in Xiamen ITG Group on September 22, 2024 and sell it today you would earn a total of  85.00  from holding Xiamen ITG Group or generate 14.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Zhangzhou Pientzehuang Pharmac  vs.  Xiamen ITG Group

Zhangzhou Pientzehuang

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zhangzhou Pientzehuang Pharmaceutical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhangzhou Pientzehuang sustained solid returns over the last few months and may actually be approaching a breakup point.

Xiamen ITG Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xiamen ITG Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiamen ITG sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhangzhou Pientzehuang and Xiamen ITG

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

The idea behind Zhangzhou Pientzehuang Pharmaceutical and Xiamen ITG Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.