Correlation Between Touchstone International and Zhuzhou Kibing

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

By analyzing existing cross correlation between Touchstone International Medical and Zhuzhou Kibing Group, you can compare the effects of market volatilities on Touchstone International and Zhuzhou Kibing 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 Touchstone International with a short position of Zhuzhou Kibing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone International and Zhuzhou Kibing.

Diversification Opportunities for Touchstone International and Zhuzhou Kibing

0.77

Correlation Coefficient

Touchstone International  Zhuzhou Kibing

Poor diversification

The 3 months correlation between Touchstone and Zhuzhou is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone International Medic and Zhuzhou Kibing Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhuzhou Kibing Group and Touchstone International 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 Touchstone International Medical are associated (or correlated) with Zhuzhou Kibing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhuzhou Kibing Group has no effect on the direction of Touchstone International i.e., Touchstone International and Zhuzhou Kibing go up and down completely randomly.

Pair Corralation between Touchstone International and Zhuzhou Kibing

Assuming the 90 days trading horizon Touchstone International Medical is expected to generate 1.01 times more return on investment than Zhuzhou Kibing. However, Touchstone International is 1.01 times more volatile than Zhuzhou Kibing Group. It trades about 0.08 of its potential returns per unit of risk. Zhuzhou Kibing Group is currently generating about 0.02 per unit of risk. If you would invest  1,581  in Touchstone International Medical on September 27, 2024 and sell it today you would earn a total of  223.00  from holding Touchstone International Medical or generate 14.1% return on investment over 90 days.

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

Touchstone International Medic  vs.  Zhuzhou Kibing Group

Touchstone International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone International Medical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Touchstone International sustained solid returns over the last few months and may actually be approaching a breakup point.

Zhuzhou Kibing Group

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Touchstone International and Zhuzhou Kibing

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

The idea behind Touchstone International Medical and Zhuzhou Kibing Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.