Correlation Between Zhejiang Daily and Foxconn Industrial

Can any of the company-specific risk be diversified away by investing in both Zhejiang Daily and Foxconn Industrial 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 Zhejiang Daily and Foxconn Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zhejiang Daily Media and Foxconn Industrial Internet, you can compare the effects of market volatilities on Zhejiang Daily and Foxconn Industrial 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 Zhejiang Daily with a short position of Foxconn Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Daily and Foxconn Industrial.

Diversification Opportunities for Zhejiang Daily and Foxconn Industrial

0.12

Correlation Coefficient

Zhejiang Daily  Foxconn Industrial

Average diversification

The 3 months correlation between Zhejiang and Foxconn is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Daily Media and Foxconn Industrial Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foxconn Industrial and Zhejiang Daily 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 Zhejiang Daily Media are associated (or correlated) with Foxconn Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foxconn Industrial has no effect on the direction of Zhejiang Daily i.e., Zhejiang Daily and Foxconn Industrial go up and down completely randomly.

Pair Corralation between Zhejiang Daily and Foxconn Industrial

Assuming the 90 days trading horizon Zhejiang Daily Media is expected to under-perform the Foxconn Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Zhejiang Daily Media is 1.19 times less risky than Foxconn Industrial. The stock trades about -0.04 of its potential returns per unit of risk. The Foxconn Industrial Internet is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,540  in Foxconn Industrial Internet on October 12, 2024 and sell it today you would lose (486.00) from holding Foxconn Industrial Internet or give up 19.13% of portfolio value over 90 days.

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

Zhejiang Daily Media  vs.  Foxconn Industrial Internet

Zhejiang Daily Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhejiang Daily Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Foxconn Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Foxconn Industrial Internet 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 Zhejiang Daily and Foxconn Industrial

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

The idea behind Zhejiang Daily Media and Foxconn Industrial Internet 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..