Correlation Between Zhejiang Publishing and Sinofibers Technology

Can any of the company-specific risk be diversified away by investing in both Zhejiang Publishing and Sinofibers Technology 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 Zhejiang Publishing and Sinofibers Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zhejiang Publishing Media and Sinofibers Technology Co, you can compare the effects of market volatilities on Zhejiang Publishing and Sinofibers Technology 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 Zhejiang Publishing with a short position of Sinofibers Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Publishing and Sinofibers Technology.

Diversification Opportunities for Zhejiang Publishing and Sinofibers Technology

0.34

Correlation Coefficient

Zhejiang Publishing  Sinofibers Technology

Weak diversification

The 3 months correlation between Zhejiang and Sinofibers is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Publishing Media and Sinofibers Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinofibers Technology and Zhejiang Publishing 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 Zhejiang Publishing Media are associated (or correlated) with Sinofibers Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinofibers Technology has no effect on the direction of Zhejiang Publishing i.e., Zhejiang Publishing and Sinofibers Technology go up and down completely randomly.

Pair Corralation between Zhejiang Publishing and Sinofibers Technology

Assuming the 90 days trading horizon Zhejiang Publishing Media is expected to under-perform the Sinofibers Technology. But the stock apears to be less risky and, when comparing its historical volatility, Zhejiang Publishing Media is 1.24 times less risky than Sinofibers Technology. The stock trades about -0.09 of its potential returns per unit of risk. The Sinofibers Technology Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  3,226  in Sinofibers Technology Co on October 25, 2024 and sell it today you would lose (383.00) from holding Sinofibers Technology Co or give up 11.87% of portfolio value over 90 days.

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

Zhejiang Publishing Media  vs.  Sinofibers Technology Co

Zhejiang Publishing Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhejiang Publishing Media 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.

Sinofibers Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinofibers Technology Co 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.

Pair Trading with Zhejiang Publishing and Sinofibers Technology

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

The idea behind Zhejiang Publishing Media and Sinofibers Technology 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.