Correlation Between Zhangjiagang Freetrade and China Singapore

Can any of the company-specific risk be diversified away by investing in both Zhangjiagang Freetrade and China Singapore 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 Zhangjiagang Freetrade and China Singapore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zhangjiagang Freetrade Science and China Singapore Suzhou Industrial, you can compare the effects of market volatilities on Zhangjiagang Freetrade and China Singapore 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 Zhangjiagang Freetrade with a short position of China Singapore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhangjiagang Freetrade and China Singapore.

Diversification Opportunities for Zhangjiagang Freetrade and China Singapore

0.3

Correlation Coefficient

Zhangjiagang Freetrade  China Singapore

Weak diversification

The 3 months correlation between Zhangjiagang and China is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Zhangjiagang Freetrade Science and China Singapore Suzhou Industr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Singapore Suzhou and Zhangjiagang Freetrade 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 Zhangjiagang Freetrade Science are associated (or correlated) with China Singapore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Singapore Suzhou has no effect on the direction of Zhangjiagang Freetrade i.e., Zhangjiagang Freetrade and China Singapore go up and down completely randomly.

Pair Corralation between Zhangjiagang Freetrade and China Singapore

Assuming the 90 days trading horizon Zhangjiagang Freetrade Science is expected to under-perform the China Singapore. But the stock apears to be less risky and, when comparing its historical volatility, Zhangjiagang Freetrade Science is 1.05 times less risky than China Singapore. The stock trades about -0.06 of its potential returns per unit of risk. The China Singapore Suzhou Industrial is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  802.00  in China Singapore Suzhou Industrial on December 28, 2024 and sell it today you would lose (29.00) from holding China Singapore Suzhou Industrial or give up 3.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

Zhangjiagang Freetrade Science  vs.  China Singapore Suzhou Industr

Zhangjiagang Freetrade

Risk-Adjusted Performance

Very Weak

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

China Singapore Suzhou

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Zhangjiagang Freetrade and China Singapore

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

The idea behind Zhangjiagang Freetrade Science and China Singapore Suzhou Industrial 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.