Correlation Between Zhongzhu Medical and Invengo Information

Can any of the company-specific risk be diversified away by investing in both Zhongzhu Medical and Invengo Information 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 Invengo Information 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 Invengo Information Technology, you can compare the effects of market volatilities on Zhongzhu Medical and Invengo Information 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 Invengo Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongzhu Medical and Invengo Information.

Diversification Opportunities for Zhongzhu Medical and Invengo Information

0.6

Correlation Coefficient

Zhongzhu Medical  Invengo Information

Poor diversification

The 3 months correlation between Zhongzhu and Invengo is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Zhongzhu Medical Holdings and Invengo Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invengo Information 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 Invengo Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invengo Information has no effect on the direction of Zhongzhu Medical i.e., Zhongzhu Medical and Invengo Information go up and down completely randomly.

Pair Corralation between Zhongzhu Medical and Invengo Information

Assuming the 90 days trading horizon Zhongzhu Medical Holdings is expected to generate 0.76 times more return on investment than Invengo Information. However, Zhongzhu Medical Holdings is 1.32 times less risky than Invengo Information. It trades about 0.06 of its potential returns per unit of risk. Invengo Information Technology is currently generating about 0.0 per unit of risk. If you would invest  134.00  in Zhongzhu Medical Holdings on December 26, 2024 and sell it today you would earn a total of  7.00  from holding Zhongzhu Medical Holdings or generate 5.22% return on investment over 90 days.

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

Zhongzhu Medical Holdings  vs.  Invengo Information Technology

Zhongzhu Medical Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongzhu Medical Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhongzhu Medical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Invengo Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invengo Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Invengo Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zhongzhu Medical and Invengo Information

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

The idea behind Zhongzhu Medical Holdings and Invengo Information Technology 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.