Correlation Between Zhongzhu Medical and Guangdong Xiongsu

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

Diversification Opportunities for Zhongzhu Medical and Guangdong Xiongsu

0.62

Correlation Coefficient

Zhongzhu Medical  Guangdong Xiongsu

Poor diversification

The 3 months correlation between Zhongzhu and Guangdong is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Zhongzhu Medical Holdings and Guangdong Xiongsu Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Xiongsu 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 Guangdong Xiongsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Xiongsu has no effect on the direction of Zhongzhu Medical i.e., Zhongzhu Medical and Guangdong Xiongsu go up and down completely randomly.

Pair Corralation between Zhongzhu Medical and Guangdong Xiongsu

Assuming the 90 days trading horizon Zhongzhu Medical Holdings is expected to under-perform the Guangdong Xiongsu. But the stock apears to be less risky and, when comparing its historical volatility, Zhongzhu Medical Holdings is 1.69 times less risky than Guangdong Xiongsu. The stock trades about 0.0 of its potential returns per unit of risk. The Guangdong Xiongsu Technology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  830.00  in Guangdong Xiongsu Technology on September 12, 2024 and sell it today you would lose (50.00) from holding Guangdong Xiongsu Technology or give up 6.02% of portfolio value over 90 days.

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

Zhongzhu Medical Holdings  vs.  Guangdong Xiongsu Technology

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.

Guangdong Xiongsu

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Xiongsu Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Xiongsu sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhongzhu Medical and Guangdong Xiongsu

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

The idea behind Zhongzhu Medical Holdings and Guangdong Xiongsu 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.