Correlation Between Jiangsu Yueda and Shenzhen Zhongzhuang

Can any of the company-specific risk be diversified away by investing in both Jiangsu Yueda and Shenzhen Zhongzhuang 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 Jiangsu Yueda and Shenzhen Zhongzhuang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiangsu Yueda Investment and Shenzhen Zhongzhuang Construction, you can compare the effects of market volatilities on Jiangsu Yueda and Shenzhen Zhongzhuang 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 Jiangsu Yueda with a short position of Shenzhen Zhongzhuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Yueda and Shenzhen Zhongzhuang.

Diversification Opportunities for Jiangsu Yueda and Shenzhen Zhongzhuang

0.28

Correlation Coefficient

Jiangsu Yueda  Shenzhen Zhongzhuang

Modest diversification

The 3 months correlation between Jiangsu and Shenzhen is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Yueda Investment and Shenzhen Zhongzhuang Construct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Zhongzhuang and Jiangsu Yueda 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 Jiangsu Yueda Investment are associated (or correlated) with Shenzhen Zhongzhuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Zhongzhuang has no effect on the direction of Jiangsu Yueda i.e., Jiangsu Yueda and Shenzhen Zhongzhuang go up and down completely randomly.

Pair Corralation between Jiangsu Yueda and Shenzhen Zhongzhuang

Assuming the 90 days trading horizon Jiangsu Yueda Investment is expected to generate 0.47 times more return on investment than Shenzhen Zhongzhuang. However, Jiangsu Yueda Investment is 2.12 times less risky than Shenzhen Zhongzhuang. It trades about 0.1 of its potential returns per unit of risk. Shenzhen Zhongzhuang Construction is currently generating about -0.05 per unit of risk. If you would invest  450.00  in Jiangsu Yueda Investment on December 27, 2024 and sell it today you would earn a total of  36.00  from holding Jiangsu Yueda Investment or generate 8.0% return on investment over 90 days.

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

Jiangsu Yueda Investment  vs.  Shenzhen Zhongzhuang Construct

Jiangsu Yueda Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Yueda Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Yueda may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Shenzhen Zhongzhuang

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen Zhongzhuang Construction 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.

Pair Trading with Jiangsu Yueda and Shenzhen Zhongzhuang

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

The idea behind Jiangsu Yueda Investment and Shenzhen Zhongzhuang Construction 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.