Correlation Between Zhengzhou Coal and Changsha Jingjia

Can any of the company-specific risk be diversified away by investing in both Zhengzhou Coal and Changsha Jingjia 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 Changsha Jingjia 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 Changsha Jingjia Microelectronics, you can compare the effects of market volatilities on Zhengzhou Coal and Changsha Jingjia 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 Changsha Jingjia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhengzhou Coal and Changsha Jingjia.

Diversification Opportunities for Zhengzhou Coal and Changsha Jingjia

0.0

Correlation Coefficient

Zhengzhou Coal  Changsha Jingjia

Pay attention - limited upside

The 3 months correlation between Zhengzhou and Changsha is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Zhengzhou Coal Mining and Changsha Jingjia Microelectron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changsha Jingjia Mic 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 Changsha Jingjia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changsha Jingjia Mic has no effect on the direction of Zhengzhou Coal i.e., Zhengzhou Coal and Changsha Jingjia go up and down completely randomly.

Pair Corralation between Zhengzhou Coal and Changsha Jingjia

If you would invest (100.00) in Changsha Jingjia Microelectronics on October 10, 2024 and sell it today you would earn a total of  100.00  from holding Changsha Jingjia Microelectronics or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Zhengzhou Coal Mining  vs.  Changsha Jingjia Microelectron

Zhengzhou Coal Mining

Risk-Adjusted Performance

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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 somewhat strong basic indicators, Zhengzhou Coal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Changsha Jingjia Mic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Zhengzhou Coal and Changsha Jingjia

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

The idea behind Zhengzhou Coal Mining and Changsha Jingjia Microelectronics 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 CEOs Directory module to screen CEOs from public companies around the world.