Correlation Between Zhengzhou Coal and JiShi Media

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

Diversification Opportunities for Zhengzhou Coal and JiShi Media

0.38

Correlation Coefficient

Zhengzhou Coal  JiShi Media

Weak diversification

The 3 months correlation between Zhengzhou and JiShi is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Zhengzhou Coal Mining and JiShi Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JiShi Media 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 JiShi Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JiShi Media has no effect on the direction of Zhengzhou Coal i.e., Zhengzhou Coal and JiShi Media go up and down completely randomly.

Pair Corralation between Zhengzhou Coal and JiShi Media

Assuming the 90 days trading horizon Zhengzhou Coal Mining is expected to under-perform the JiShi Media. But the stock apears to be less risky and, when comparing its historical volatility, Zhengzhou Coal Mining is 2.64 times less risky than JiShi Media. The stock trades about -0.06 of its potential returns per unit of risk. The JiShi Media Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  149.00  in JiShi Media Co on September 30, 2024 and sell it today you would earn a total of  46.00  from holding JiShi Media Co or generate 30.87% return on investment over 90 days.

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

Zhengzhou Coal Mining  vs.  JiShi Media Co

Zhengzhou Coal Mining

Risk-Adjusted Performance

0 of 100

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.

JiShi Media

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JiShi Media Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JiShi Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhengzhou Coal and JiShi Media

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

The idea behind Zhengzhou Coal Mining and JiShi Media Co 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.