Correlation Between Zhuzhou Kibing and Jiangsu Phoenix

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

By analyzing existing cross correlation between Zhuzhou Kibing Group and Jiangsu Phoenix Publishing, you can compare the effects of market volatilities on Zhuzhou Kibing and Jiangsu Phoenix 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 Zhuzhou Kibing with a short position of Jiangsu Phoenix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhuzhou Kibing and Jiangsu Phoenix.

Diversification Opportunities for Zhuzhou Kibing and Jiangsu Phoenix

-0.53

Correlation Coefficient

Zhuzhou Kibing  Jiangsu Phoenix

Excellent diversification

The 3 months correlation between Zhuzhou and Jiangsu is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Zhuzhou Kibing Group and Jiangsu Phoenix Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Phoenix Publ and Zhuzhou Kibing 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 Zhuzhou Kibing Group are associated (or correlated) with Jiangsu Phoenix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Phoenix Publ has no effect on the direction of Zhuzhou Kibing i.e., Zhuzhou Kibing and Jiangsu Phoenix go up and down completely randomly.

Pair Corralation between Zhuzhou Kibing and Jiangsu Phoenix

Assuming the 90 days trading horizon Zhuzhou Kibing Group is expected to under-perform the Jiangsu Phoenix. In addition to that, Zhuzhou Kibing is 1.26 times more volatile than Jiangsu Phoenix Publishing. It trades about -0.06 of its total potential returns per unit of risk. Jiangsu Phoenix Publishing is currently generating about -0.02 per unit of volatility. If you would invest  1,140  in Jiangsu Phoenix Publishing on October 13, 2024 and sell it today you would lose (90.00) from holding Jiangsu Phoenix Publishing or give up 7.89% of portfolio value over 90 days.

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

Zhuzhou Kibing Group  vs.  Jiangsu Phoenix Publishing

Zhuzhou Kibing Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhuzhou Kibing Group 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.

Jiangsu Phoenix Publ

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Zhuzhou Kibing and Jiangsu Phoenix

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

The idea behind Zhuzhou Kibing Group and Jiangsu Phoenix Publishing 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .