Correlation Between Zhengzhou Coal and Medprin Regenerative

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

Diversification Opportunities for Zhengzhou Coal and Medprin Regenerative

0.56

Correlation Coefficient

Zhengzhou Coal  Medprin Regenerative

Very weak diversification

The 3 months correlation between Zhengzhou and Medprin is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Zhengzhou Coal Mining and Medprin Regenerative Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medprin Regenerative 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 Medprin Regenerative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medprin Regenerative has no effect on the direction of Zhengzhou Coal i.e., Zhengzhou Coal and Medprin Regenerative go up and down completely randomly.

Pair Corralation between Zhengzhou Coal and Medprin Regenerative

Assuming the 90 days trading horizon Zhengzhou Coal Mining is expected to generate 1.14 times more return on investment than Medprin Regenerative. However, Zhengzhou Coal is 1.14 times more volatile than Medprin Regenerative Medical. It trades about 0.14 of its potential returns per unit of risk. Medprin Regenerative Medical is currently generating about 0.09 per unit of risk. If you would invest  1,320  in Zhengzhou Coal Mining on December 25, 2024 and sell it today you would earn a total of  217.00  from holding Zhengzhou Coal Mining or generate 16.44% return on investment over 90 days.

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

Zhengzhou Coal Mining  vs.  Medprin Regenerative Medical

Zhengzhou Coal Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zhengzhou Coal Mining are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhengzhou Coal sustained solid returns over the last few months and may actually be approaching a breakup point.

Medprin Regenerative

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Medprin Regenerative Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Medprin Regenerative may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Zhengzhou Coal and Medprin Regenerative

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

The idea behind Zhengzhou Coal Mining and Medprin Regenerative Medical 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.