Correlation Between Zhengping RoadBridge and Shenzhen Fortune

Can any of the company-specific risk be diversified away by investing in both Zhengping RoadBridge and Shenzhen Fortune 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 Shenzhen Fortune 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 Shenzhen Fortune Trend, you can compare the effects of market volatilities on Zhengping RoadBridge and Shenzhen Fortune 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 Shenzhen Fortune. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhengping RoadBridge and Shenzhen Fortune.

Diversification Opportunities for Zhengping RoadBridge and Shenzhen Fortune

-0.04

Correlation Coefficient

Zhengping RoadBridge  Shenzhen Fortune

Good diversification

The 3 months correlation between Zhengping and Shenzhen is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Zhengping RoadBridge Constr and Shenzhen Fortune Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Fortune Trend 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 Shenzhen Fortune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Fortune Trend has no effect on the direction of Zhengping RoadBridge i.e., Zhengping RoadBridge and Shenzhen Fortune go up and down completely randomly.

Pair Corralation between Zhengping RoadBridge and Shenzhen Fortune

Assuming the 90 days trading horizon Zhengping RoadBridge Constr is expected to generate 1.1 times more return on investment than Shenzhen Fortune. However, Zhengping RoadBridge is 1.1 times more volatile than Shenzhen Fortune Trend. It trades about 0.02 of its potential returns per unit of risk. Shenzhen Fortune Trend is currently generating about -0.12 per unit of risk. If you would invest  387.00  in Zhengping RoadBridge Constr on December 28, 2024 and sell it today you would earn a total of  3.00  from holding Zhengping RoadBridge Constr or generate 0.78% return on investment over 90 days.

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

Zhengping RoadBridge Constr  vs.  Shenzhen Fortune Trend

Zhengping RoadBridge

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhengping RoadBridge Constr are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zhengping RoadBridge is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shenzhen Fortune Trend

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen Fortune Trend 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Zhengping RoadBridge and Shenzhen Fortune

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

The idea behind Zhengping RoadBridge Constr and Shenzhen Fortune Trend 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.