Correlation Between Zhongzhu Medical and Unigroup Guoxin

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

By analyzing existing cross correlation between Zhongzhu Medical Holdings and Unigroup Guoxin Microelectronics, you can compare the effects of market volatilities on Zhongzhu Medical and Unigroup Guoxin 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 Zhongzhu Medical with a short position of Unigroup Guoxin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongzhu Medical and Unigroup Guoxin.

Diversification Opportunities for Zhongzhu Medical and Unigroup Guoxin

0.42

Correlation Coefficient

Zhongzhu Medical  Unigroup Guoxin

Very weak diversification

The 3 months correlation between Zhongzhu and Unigroup is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Zhongzhu Medical Holdings and Unigroup Guoxin Microelectroni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unigroup Guoxin Micr and Zhongzhu Medical 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 Zhongzhu Medical Holdings are associated (or correlated) with Unigroup Guoxin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unigroup Guoxin Micr has no effect on the direction of Zhongzhu Medical i.e., Zhongzhu Medical and Unigroup Guoxin go up and down completely randomly.

Pair Corralation between Zhongzhu Medical and Unigroup Guoxin

Assuming the 90 days trading horizon Zhongzhu Medical is expected to generate 1.97 times less return on investment than Unigroup Guoxin. But when comparing it to its historical volatility, Zhongzhu Medical Holdings is 1.48 times less risky than Unigroup Guoxin. It trades about 0.15 of its potential returns per unit of risk. Unigroup Guoxin Microelectronics is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  4,587  in Unigroup Guoxin Microelectronics on September 22, 2024 and sell it today you would earn a total of  2,302  from holding Unigroup Guoxin Microelectronics or generate 50.19% return on investment over 90 days.

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

Zhongzhu Medical Holdings  vs.  Unigroup Guoxin Microelectroni

Zhongzhu Medical Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongzhu Medical Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhongzhu Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Unigroup Guoxin Micr

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unigroup Guoxin Microelectronics are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Unigroup Guoxin sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhongzhu Medical and Unigroup Guoxin

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

The idea behind Zhongzhu Medical Holdings and Unigroup Guoxin Microelectronics 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.