Correlation Between Gem Year and Zhongrun Resources

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Can any of the company-specific risk be diversified away by investing in both Gem Year and Zhongrun Resources 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 Zhongrun Resources 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 Zhongrun Resources Investment, you can compare the effects of market volatilities on Gem Year and Zhongrun Resources 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 Zhongrun Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gem Year and Zhongrun Resources.

Diversification Opportunities for Gem Year and Zhongrun Resources

GemZhongrunDiversified AwayGemZhongrunDiversified Away100%
0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Gem and Zhongrun is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Gem Year Industrial Co and Zhongrun Resources Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongrun Resources 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 Zhongrun Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongrun Resources has no effect on the direction of Gem Year i.e., Gem Year and Zhongrun Resources go up and down completely randomly.

Pair Corralation between Gem Year and Zhongrun Resources

Assuming the 90 days trading horizon Gem Year is expected to generate 3.52 times less return on investment than Zhongrun Resources. But when comparing it to its historical volatility, Gem Year Industrial Co is 1.15 times less risky than Zhongrun Resources. It trades about 0.16 of its potential returns per unit of risk. Zhongrun Resources Investment is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest  140.00  in Zhongrun Resources Investment on September 26, 2024 and sell it today you would earn a total of  262.00  from holding Zhongrun Resources Investment or generate 187.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy98.33%
ValuesDaily Returns

Gem Year Industrial Co  vs.  Zhongrun Resources Investment

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 050100150200
JavaScript chart by amCharts 3.21.15601002 000506
       Timeline  
Gem Year Industrial 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Gem Year Industrial Co are ranked lower than 12 (%) 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec3.544.55
Zhongrun Resources 

Risk-Adjusted Performance

38 of 100

 
Weak
 
Strong
Very Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Zhongrun Resources Investment are ranked lower than 38 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhongrun Resources sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1.522.533.54

Gem Year and Zhongrun Resources Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.83-7.36-4.9-2.430.02.675.398.1110.84 0.0200.0250.0300.035
JavaScript chart by amCharts 3.21.15601002 000506
       Returns  

Pair Trading with Gem Year and Zhongrun Resources

The main advantage of trading using opposite Gem Year and Zhongrun Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gem Year position performs unexpectedly, Zhongrun Resources 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 Zhongrun Resources will offset losses from the drop in Zhongrun Resources' long position.
The idea behind Gem Year Industrial Co and Zhongrun Resources Investment 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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