Correlation Between Xiamen ITG and Zhuhai Comleader

Can any of the company-specific risk be diversified away by investing in both Xiamen ITG and Zhuhai Comleader 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 Xiamen ITG and Zhuhai Comleader into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xiamen ITG Group and Zhuhai Comleader Information, you can compare the effects of market volatilities on Xiamen ITG and Zhuhai Comleader 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 Xiamen ITG with a short position of Zhuhai Comleader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiamen ITG and Zhuhai Comleader.

Diversification Opportunities for Xiamen ITG and Zhuhai Comleader

-0.25

Correlation Coefficient

Xiamen ITG  Zhuhai Comleader

Very good diversification

The 3 months correlation between Xiamen and Zhuhai is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Xiamen ITG Group and Zhuhai Comleader Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhuhai Comleader Inf and Xiamen ITG 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 Xiamen ITG Group are associated (or correlated) with Zhuhai Comleader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhuhai Comleader Inf has no effect on the direction of Xiamen ITG i.e., Xiamen ITG and Zhuhai Comleader go up and down completely randomly.

Pair Corralation between Xiamen ITG and Zhuhai Comleader

Assuming the 90 days trading horizon Xiamen ITG Group is expected to generate 0.52 times more return on investment than Zhuhai Comleader. However, Xiamen ITG Group is 1.91 times less risky than Zhuhai Comleader. It trades about 0.01 of its potential returns per unit of risk. Zhuhai Comleader Information is currently generating about -0.01 per unit of risk. If you would invest  674.00  in Xiamen ITG Group on October 4, 2024 and sell it today you would lose (10.00) from holding Xiamen ITG Group or give up 1.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Xiamen ITG Group  vs.  Zhuhai Comleader Information

Xiamen ITG Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xiamen ITG Group 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.

Zhuhai Comleader Inf

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhuhai Comleader Information are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhuhai Comleader may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Xiamen ITG and Zhuhai Comleader

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

The idea behind Xiamen ITG Group and Zhuhai Comleader Information 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.