Correlation Between Gem Year and Zoomlion Heavy

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Can any of the company-specific risk be diversified away by investing in both Gem Year and Zoomlion Heavy 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 Gem Year and Zoomlion Heavy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gem Year Industrial Co and Zoomlion Heavy Industry, you can compare the effects of market volatilities on Gem Year and Zoomlion Heavy 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 Gem Year with a short position of Zoomlion Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gem Year and Zoomlion Heavy.

Diversification Opportunities for Gem Year and Zoomlion Heavy

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Gem and Zoomlion is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Gem Year Industrial Co and Zoomlion Heavy Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoomlion Heavy Industry and Gem Year 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 Gem Year Industrial Co are associated (or correlated) with Zoomlion Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoomlion Heavy Industry has no effect on the direction of Gem Year i.e., Gem Year and Zoomlion Heavy go up and down completely randomly.

Pair Corralation between Gem Year and Zoomlion Heavy

Assuming the 90 days trading horizon Gem Year is expected to generate 13.84 times less return on investment than Zoomlion Heavy. In addition to that, Gem Year is 1.26 times more volatile than Zoomlion Heavy Industry. It trades about 0.0 of its total potential returns per unit of risk. Zoomlion Heavy Industry is currently generating about 0.04 per unit of volatility. If you would invest  534.00  in Zoomlion Heavy Industry on October 12, 2024 and sell it today you would earn a total of  152.00  from holding Zoomlion Heavy Industry or generate 28.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Gem Year Industrial Co  vs.  Zoomlion Heavy Industry

 Performance 
       Timeline  
Gem Year Industrial 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Gem Year Industrial Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gem Year sustained solid returns over the last few months and may actually be approaching a breakup point.
Zoomlion Heavy Industry 

Risk-Adjusted Performance

0 of 100

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

Gem Year and Zoomlion Heavy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gem Year and Zoomlion Heavy

The main advantage of trading using opposite Gem Year and Zoomlion Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gem Year position performs unexpectedly, Zoomlion Heavy 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 Zoomlion Heavy will offset losses from the drop in Zoomlion Heavy's long position.
The idea behind Gem Year Industrial Co and Zoomlion Heavy Industry 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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