Correlation Between Xinjiang Baodi and Zhengping RoadBridge

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Xinjiang Baodi and Zhengping RoadBridge 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 Xinjiang Baodi and Zhengping RoadBridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xinjiang Baodi Mining and Zhengping RoadBridge Constr, you can compare the effects of market volatilities on Xinjiang Baodi and Zhengping RoadBridge 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 Xinjiang Baodi with a short position of Zhengping RoadBridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Baodi and Zhengping RoadBridge.

Diversification Opportunities for Xinjiang Baodi and Zhengping RoadBridge

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Xinjiang and Zhengping is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Baodi Mining and Zhengping RoadBridge Constr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhengping RoadBridge and Xinjiang Baodi 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 Xinjiang Baodi Mining are associated (or correlated) with Zhengping RoadBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhengping RoadBridge has no effect on the direction of Xinjiang Baodi i.e., Xinjiang Baodi and Zhengping RoadBridge go up and down completely randomly.

Pair Corralation between Xinjiang Baodi and Zhengping RoadBridge

Assuming the 90 days trading horizon Xinjiang Baodi Mining is expected to under-perform the Zhengping RoadBridge. But the stock apears to be less risky and, when comparing its historical volatility, Xinjiang Baodi Mining is 1.78 times less risky than Zhengping RoadBridge. The stock trades about -0.01 of its potential returns per unit of risk. The Zhengping RoadBridge Constr is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  300.00  in Zhengping RoadBridge Constr on October 8, 2024 and sell it today you would earn a total of  30.00  from holding Zhengping RoadBridge Constr or generate 10.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Xinjiang Baodi Mining  vs.  Zhengping RoadBridge Constr

 Performance 
       Timeline  
Xinjiang Baodi Mining 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Zhengping RoadBridge Constr are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhengping RoadBridge sustained solid returns over the last few months and may actually be approaching a breakup point.

Xinjiang Baodi and Zhengping RoadBridge Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xinjiang Baodi and Zhengping RoadBridge

The main advantage of trading using opposite Xinjiang Baodi and Zhengping RoadBridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinjiang Baodi position performs unexpectedly, Zhengping RoadBridge 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 Zhengping RoadBridge will offset losses from the drop in Zhengping RoadBridge's long position.
The idea behind Xinjiang Baodi Mining and Zhengping RoadBridge Constr 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

Other Complementary Tools

Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Commodity Directory
Find actively traded commodities issued by global exchanges
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities