Correlation Between Dongxing Sec and Zhangjiagang Freetrade

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

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

Diversification Opportunities for Dongxing Sec and Zhangjiagang Freetrade

0.08

Correlation Coefficient

Dongxing Sec  Zhangjiagang Freetrade

Significant diversification

The 3 months correlation between Dongxing and Zhangjiagang is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dongxing Sec Co and Zhangjiagang Freetrade Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhangjiagang Freetrade and Dongxing Sec 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 Dongxing Sec Co are associated (or correlated) with Zhangjiagang Freetrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhangjiagang Freetrade has no effect on the direction of Dongxing Sec i.e., Dongxing Sec and Zhangjiagang Freetrade go up and down completely randomly.

Pair Corralation between Dongxing Sec and Zhangjiagang Freetrade

Assuming the 90 days trading horizon Dongxing Sec Co is expected to generate 1.71 times more return on investment than Zhangjiagang Freetrade. However, Dongxing Sec is 1.71 times more volatile than Zhangjiagang Freetrade Science. It trades about 0.01 of its potential returns per unit of risk. Zhangjiagang Freetrade Science is currently generating about -0.08 per unit of risk. If you would invest  1,176  in Dongxing Sec Co on December 28, 2024 and sell it today you would earn a total of  2.00  from holding Dongxing Sec Co or generate 0.17% return on investment over 90 days.

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

Dongxing Sec Co  vs.  Zhangjiagang Freetrade Science

Dongxing Sec

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dongxing Sec Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dongxing Sec is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 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 Dongxing Sec and Zhangjiagang Freetrade

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

The idea behind Dongxing Sec Co and Zhangjiagang Freetrade Science 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.