Correlation Between Zhengping RoadBridge and Henan Shuanghui

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Can any of the company-specific risk be diversified away by investing in both Zhengping RoadBridge and Henan Shuanghui 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 Zhengping RoadBridge and Henan Shuanghui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zhengping RoadBridge Constr and Henan Shuanghui Investment, you can compare the effects of market volatilities on Zhengping RoadBridge and Henan Shuanghui 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 Zhengping RoadBridge with a short position of Henan Shuanghui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhengping RoadBridge and Henan Shuanghui.

Diversification Opportunities for Zhengping RoadBridge and Henan Shuanghui

ZhengpingHenanDiversified AwayZhengpingHenanDiversified Away100%
0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Zhengping and Henan is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Zhengping RoadBridge Constr and Henan Shuanghui Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henan Shuanghui Inve and Zhengping RoadBridge 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 Zhengping RoadBridge Constr are associated (or correlated) with Henan Shuanghui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henan Shuanghui Inve has no effect on the direction of Zhengping RoadBridge i.e., Zhengping RoadBridge and Henan Shuanghui go up and down completely randomly.

Pair Corralation between Zhengping RoadBridge and Henan Shuanghui

Assuming the 90 days trading horizon Zhengping RoadBridge Constr is expected to generate 3.03 times more return on investment than Henan Shuanghui. However, Zhengping RoadBridge is 3.03 times more volatile than Henan Shuanghui Investment. It trades about 0.13 of its potential returns per unit of risk. Henan Shuanghui Investment is currently generating about -0.03 per unit of risk. If you would invest  290.00  in Zhengping RoadBridge Constr on September 30, 2024 and sell it today you would earn a total of  104.00  from holding Zhengping RoadBridge Constr or generate 35.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Zhengping RoadBridge Constr  vs.  Henan Shuanghui Investment

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 0102030405060
JavaScript chart by amCharts 3.21.15603843 000895
       Timeline  
Zhengping RoadBridge 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Zhengping RoadBridge Constr are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhengping RoadBridge sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2.833.23.43.63.844.2
Henan Shuanghui Inve 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Henan Shuanghui Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Henan Shuanghui is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec242526272829

Zhengping RoadBridge and Henan Shuanghui Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-13.71-10.27-6.83-3.390.03.597.3611.1414.9118.69 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15603843 000895
       Returns  

Pair Trading with Zhengping RoadBridge and Henan Shuanghui

The main advantage of trading using opposite Zhengping RoadBridge and Henan Shuanghui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhengping RoadBridge position performs unexpectedly, Henan Shuanghui 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 Henan Shuanghui will offset losses from the drop in Henan Shuanghui's long position.
The idea behind Zhengping RoadBridge Constr and Henan Shuanghui Investment 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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