Correlation Between Zhende Medical and Northking Information

Can any of the company-specific risk be diversified away by investing in both Zhende Medical and Northking Information 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 Zhende Medical and Northking Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Zhende Medical and Northking Information

0.54

Correlation Coefficient

Zhende Medical  Northking Information

Very weak diversification

The 3 months correlation between Zhende and Northking is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Zhende Medical Co and Northking Information Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northking Information and Zhende Medical 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 Zhende Medical Co are associated (or correlated) with Northking Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northking Information has no effect on the direction of Zhende Medical i.e., Zhende Medical and Northking Information go up and down completely randomly.

Pair Corralation between Zhende Medical and Northking Information

Assuming the 90 days trading horizon Zhende Medical is expected to generate 5.7 times less return on investment than Northking Information. But when comparing it to its historical volatility, Zhende Medical Co is 1.72 times less risky than Northking Information. It trades about 0.01 of its potential returns per unit of risk. Northking Information Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,126  in Northking Information Technology on October 13, 2024 and sell it today you would earn a total of  164.00  from holding Northking Information Technology or generate 14.56% return on investment over 90 days.

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

Zhende Medical Co  vs.  Northking Information Technolo

Zhende Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhende Medical 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.

Northking Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northking Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Zhende Medical and Northking Information

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

The idea behind Zhende Medical Co and Northking Information Technology 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.