Correlation Between Zhejiang Yongjin and Risuntek

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

By analyzing existing cross correlation between Zhejiang Yongjin Metal and Risuntek, you can compare the effects of market volatilities on Zhejiang Yongjin and Risuntek 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 Zhejiang Yongjin with a short position of Risuntek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Yongjin and Risuntek.

Diversification Opportunities for Zhejiang Yongjin and Risuntek

0.11

Correlation Coefficient

Zhejiang Yongjin  Risuntek

Average diversification

The 3 months correlation between Zhejiang and Risuntek is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Yongjin Metal and Risuntek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Risuntek and Zhejiang Yongjin 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 Zhejiang Yongjin Metal are associated (or correlated) with Risuntek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Risuntek has no effect on the direction of Zhejiang Yongjin i.e., Zhejiang Yongjin and Risuntek go up and down completely randomly.

Pair Corralation between Zhejiang Yongjin and Risuntek

Assuming the 90 days trading horizon Zhejiang Yongjin Metal is expected to under-perform the Risuntek. But the stock apears to be less risky and, when comparing its historical volatility, Zhejiang Yongjin Metal is 1.59 times less risky than Risuntek. The stock trades about -0.03 of its potential returns per unit of risk. The Risuntek is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,005  in Risuntek on October 11, 2024 and sell it today you would earn a total of  203.00  from holding Risuntek or generate 10.12% return on investment over 90 days.

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

Zhejiang Yongjin Metal  vs.  Risuntek

Zhejiang Yongjin Metal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Risuntek

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Risuntek are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Risuntek may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Zhejiang Yongjin and Risuntek

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

The idea behind Zhejiang Yongjin Metal and Risuntek 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.