Correlation Between Zhongzhu Medical and Marssenger Kitchenware

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

Diversification Opportunities for Zhongzhu Medical and Marssenger Kitchenware

0.5

Correlation Coefficient

Zhongzhu Medical  Marssenger Kitchenware

Very weak diversification

The 3 months correlation between Zhongzhu and Marssenger is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Zhongzhu Medical Holdings and Marssenger Kitchenware Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marssenger Kitchenware 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 Marssenger Kitchenware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marssenger Kitchenware has no effect on the direction of Zhongzhu Medical i.e., Zhongzhu Medical and Marssenger Kitchenware go up and down completely randomly.

Pair Corralation between Zhongzhu Medical and Marssenger Kitchenware

Assuming the 90 days trading horizon Zhongzhu Medical is expected to generate 4.7 times less return on investment than Marssenger Kitchenware. But when comparing it to its historical volatility, Zhongzhu Medical Holdings is 1.8 times less risky than Marssenger Kitchenware. It trades about 0.02 of its potential returns per unit of risk. Marssenger Kitchenware Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,208  in Marssenger Kitchenware Co on October 4, 2024 and sell it today you would earn a total of  162.00  from holding Marssenger Kitchenware Co or generate 13.41% 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.  Marssenger Kitchenware Co

Zhongzhu Medical Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Marssenger Kitchenware

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marssenger Kitchenware Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Zhongzhu Medical and Marssenger Kitchenware

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

The idea behind Zhongzhu Medical Holdings and Marssenger Kitchenware Co 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.