Correlation Between Zhengzhou Coal and Jiangxi Selon

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

Diversification Opportunities for Zhengzhou Coal and Jiangxi Selon

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Zhengzhou and Jiangxi is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Zhengzhou Coal Mining and Jiangxi Selon Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangxi Selon Industrial and Zhengzhou Coal 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 Zhengzhou Coal Mining are associated (or correlated) with Jiangxi Selon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangxi Selon Industrial has no effect on the direction of Zhengzhou Coal i.e., Zhengzhou Coal and Jiangxi Selon go up and down completely randomly.

Pair Corralation between Zhengzhou Coal and Jiangxi Selon

Assuming the 90 days trading horizon Zhengzhou Coal Mining is expected to under-perform the Jiangxi Selon. But the stock apears to be less risky and, when comparing its historical volatility, Zhengzhou Coal Mining is 1.22 times less risky than Jiangxi Selon. The stock trades about -0.06 of its potential returns per unit of risk. The Jiangxi Selon Industrial is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  597.00  in Jiangxi Selon Industrial on October 3, 2024 and sell it today you would earn a total of  215.00  from holding Jiangxi Selon Industrial or generate 36.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Zhengzhou Coal Mining  vs.  Jiangxi Selon Industrial

 Performance 
       Timeline  
Zhengzhou Coal Mining 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Zhengzhou Coal Mining 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.
JavaScript chart by amCharts 3.21.15NovDecDec1212.51313.51414.51515.5
Jiangxi Selon Industrial 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Jiangxi Selon Industrial are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangxi Selon sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecDec5.566.577.58

Zhengzhou Coal and Jiangxi Selon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zhengzhou Coal and Jiangxi Selon

The main advantage of trading using opposite Zhengzhou Coal and Jiangxi Selon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhengzhou Coal position performs unexpectedly, Jiangxi Selon 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 Jiangxi Selon will offset losses from the drop in Jiangxi Selon's long position.
The idea behind Zhengzhou Coal Mining and Jiangxi Selon Industrial 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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