Correlation Between Zhuhai Comleader and Chongqing Road

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

By analyzing existing cross correlation between Zhuhai Comleader Information and Chongqing Road Bridge, you can compare the effects of market volatilities on Zhuhai Comleader and Chongqing Road 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 Zhuhai Comleader with a short position of Chongqing Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhuhai Comleader and Chongqing Road.

Diversification Opportunities for Zhuhai Comleader and Chongqing Road

0.88

Correlation Coefficient

Zhuhai Comleader  Chongqing Road

Very poor diversification

The 3 months correlation between Zhuhai and Chongqing is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Zhuhai Comleader Information and Chongqing Road Bridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Road Bridge and Zhuhai Comleader 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 Zhuhai Comleader Information are associated (or correlated) with Chongqing Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Road Bridge has no effect on the direction of Zhuhai Comleader i.e., Zhuhai Comleader and Chongqing Road go up and down completely randomly.

Pair Corralation between Zhuhai Comleader and Chongqing Road

Assuming the 90 days trading horizon Zhuhai Comleader is expected to generate 1.14 times less return on investment than Chongqing Road. In addition to that, Zhuhai Comleader is 1.03 times more volatile than Chongqing Road Bridge. It trades about 0.25 of its total potential returns per unit of risk. Chongqing Road Bridge is currently generating about 0.29 per unit of volatility. If you would invest  363.00  in Chongqing Road Bridge on September 12, 2024 and sell it today you would earn a total of  360.00  from holding Chongqing Road Bridge or generate 99.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.25%
Values	Daily Returns

Zhuhai Comleader Information  vs.  Chongqing Road Bridge

Zhuhai Comleader Inf

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zhuhai Comleader Information are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhuhai Comleader sustained solid returns over the last few months and may actually be approaching a breakup point.

Chongqing Road Bridge

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chongqing Road Bridge are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chongqing Road sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhuhai Comleader and Chongqing Road

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

The idea behind Zhuhai Comleader Information and Chongqing Road Bridge 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.