Correlation Between Zhejiang Daily and Yantai North

Can any of the company-specific risk be diversified away by investing in both Zhejiang Daily and Yantai North 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 Yantai North 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 Yantai North Andre, you can compare the effects of market volatilities on Zhejiang Daily and Yantai North 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 Yantai North. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Daily and Yantai North.

Diversification Opportunities for Zhejiang Daily and Yantai North

0.53

Correlation Coefficient

Zhejiang Daily  Yantai North

Very weak diversification

The 3 months correlation between Zhejiang and Yantai is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Daily Media and Yantai North Andre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yantai North Andre 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 Yantai North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yantai North Andre has no effect on the direction of Zhejiang Daily i.e., Zhejiang Daily and Yantai North go up and down completely randomly.

Pair Corralation between Zhejiang Daily and Yantai North

Assuming the 90 days trading horizon Zhejiang Daily is expected to generate 16.29 times less return on investment than Yantai North. But when comparing it to its historical volatility, Zhejiang Daily Media is 1.38 times less risky than Yantai North. It trades about 0.0 of its potential returns per unit of risk. Yantai North Andre is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,422  in Yantai North Andre on October 6, 2024 and sell it today you would earn a total of  301.00  from holding Yantai North Andre or generate 12.43% return on investment over 90 days.

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

Zhejiang Daily Media  vs.  Yantai North Andre

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.

Yantai North Andre

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Zhejiang Daily and Yantai North

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

The idea behind Zhejiang Daily Media and Yantai North Andre 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.