Correlation Between Zhongtong Guomai and Digiwin Software

Can any of the company-specific risk be diversified away by investing in both Zhongtong Guomai and Digiwin Software 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 Zhongtong Guomai and Digiwin Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zhongtong Guomai Communication and Digiwin Software Co, you can compare the effects of market volatilities on Zhongtong Guomai and Digiwin Software 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 Zhongtong Guomai with a short position of Digiwin Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongtong Guomai and Digiwin Software.

Diversification Opportunities for Zhongtong Guomai and Digiwin Software

0.46

Correlation Coefficient

Zhongtong Guomai  Digiwin Software

Very weak diversification

The 3 months correlation between Zhongtong and Digiwin is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Zhongtong Guomai Communication and Digiwin Software Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digiwin Software and Zhongtong Guomai 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 Zhongtong Guomai Communication are associated (or correlated) with Digiwin Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digiwin Software has no effect on the direction of Zhongtong Guomai i.e., Zhongtong Guomai and Digiwin Software go up and down completely randomly.

Pair Corralation between Zhongtong Guomai and Digiwin Software

Assuming the 90 days trading horizon Zhongtong Guomai Communication is expected to under-perform the Digiwin Software. In addition to that, Zhongtong Guomai is 2.14 times more volatile than Digiwin Software Co. It trades about -0.25 of its total potential returns per unit of risk. Digiwin Software Co is currently generating about -0.1 per unit of volatility. If you would invest  2,761  in Digiwin Software Co on October 24, 2024 and sell it today you would lose (223.00) from holding Digiwin Software Co or give up 8.08% of portfolio value over 90 days.

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

Zhongtong Guomai Communication  vs.  Digiwin Software Co

Zhongtong Guomai Com

Risk-Adjusted Performance

0 of 100

Weak

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

Digiwin Software

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Digiwin Software Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Digiwin Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Zhongtong Guomai and Digiwin Software

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

The idea behind Zhongtong Guomai Communication and Digiwin Software 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.