Correlation Between Shanghai Jinfeng and Zoy Home

Can any of the company-specific risk be diversified away by investing in both Shanghai Jinfeng and Zoy Home 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 Shanghai Jinfeng and Zoy Home into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shanghai Jinfeng Wine and Zoy Home Furnishing, you can compare the effects of market volatilities on Shanghai Jinfeng and Zoy Home 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 Shanghai Jinfeng with a short position of Zoy Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Jinfeng and Zoy Home.

Diversification Opportunities for Shanghai Jinfeng and Zoy Home

0.59

Correlation Coefficient

Shanghai Jinfeng  Zoy Home

Very weak diversification

The 3 months correlation between Shanghai and Zoy is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Jinfeng Wine and Zoy Home Furnishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoy Home Furnishing and Shanghai Jinfeng 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 Shanghai Jinfeng Wine are associated (or correlated) with Zoy Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoy Home Furnishing has no effect on the direction of Shanghai Jinfeng i.e., Shanghai Jinfeng and Zoy Home go up and down completely randomly.

Pair Corralation between Shanghai Jinfeng and Zoy Home

Assuming the 90 days trading horizon Shanghai Jinfeng Wine is expected to under-perform the Zoy Home. But the stock apears to be less risky and, when comparing its historical volatility, Shanghai Jinfeng Wine is 1.06 times less risky than Zoy Home. The stock trades about -0.13 of its potential returns per unit of risk. The Zoy Home Furnishing is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,191  in Zoy Home Furnishing on December 11, 2024 and sell it today you would lose (35.00) from holding Zoy Home Furnishing or give up 2.94% of portfolio value over 90 days.

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

Shanghai Jinfeng Wine  vs.  Zoy Home Furnishing

Shanghai Jinfeng Wine

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shanghai Jinfeng Wine 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Zoy Home Furnishing

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Shanghai Jinfeng and Zoy Home

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

The idea behind Shanghai Jinfeng Wine and Zoy Home Furnishing 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 Stocks Directory module to find actively traded stocks across global markets.