Correlation Between Zoy Home and China Express

Can any of the company-specific risk be diversified away by investing in both Zoy Home and China Express 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 Zoy Home and China Express into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zoy Home Furnishing and China Express Airlines, you can compare the effects of market volatilities on Zoy Home and China Express 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 Zoy Home with a short position of China Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoy Home and China Express.

Diversification Opportunities for Zoy Home and China Express

0.0

Correlation Coefficient

Zoy Home  China Express

Pay attention - limited upside

The 3 months correlation between Zoy and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Zoy Home Furnishing and China Express Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Express Airlines and Zoy Home 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 Zoy Home Furnishing are associated (or correlated) with China Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Express Airlines has no effect on the direction of Zoy Home i.e., Zoy Home and China Express go up and down completely randomly.

Pair Corralation between Zoy Home and China Express

If you would invest  0.00  in China Express Airlines on December 29, 2024 and sell it today you would earn a total of  0.00  from holding China Express Airlines or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.72%
Values	Daily Returns

Zoy Home Furnishing  vs.  China Express Airlines

Zoy Home Furnishing

Risk-Adjusted Performance

Very Weak

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

China Express Airlines

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Zoy Home and China Express

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

The idea behind Zoy Home Furnishing and China Express Airlines 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.