Correlation Between Zhuzhou CRRC and Uroica Mining

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

By analyzing existing cross correlation between Zhuzhou CRRC Times and Uroica Mining Safety, you can compare the effects of market volatilities on Zhuzhou CRRC and Uroica Mining 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 Zhuzhou CRRC with a short position of Uroica Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhuzhou CRRC and Uroica Mining.

Diversification Opportunities for Zhuzhou CRRC and Uroica Mining

0.38

Correlation Coefficient

Zhuzhou CRRC  Uroica Mining

Weak diversification

The 3 months correlation between Zhuzhou and Uroica is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Zhuzhou CRRC Times and Uroica Mining Safety in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uroica Mining Safety and Zhuzhou CRRC 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 Zhuzhou CRRC Times are associated (or correlated) with Uroica Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uroica Mining Safety has no effect on the direction of Zhuzhou CRRC i.e., Zhuzhou CRRC and Uroica Mining go up and down completely randomly.

Pair Corralation between Zhuzhou CRRC and Uroica Mining

Assuming the 90 days trading horizon Zhuzhou CRRC Times is expected to generate 0.8 times more return on investment than Uroica Mining. However, Zhuzhou CRRC Times is 1.25 times less risky than Uroica Mining. It trades about 0.04 of its potential returns per unit of risk. Uroica Mining Safety is currently generating about 0.02 per unit of risk. If you would invest  3,908  in Zhuzhou CRRC Times on September 26, 2024 and sell it today you would earn a total of  879.00  from holding Zhuzhou CRRC Times or generate 22.49% return on investment over 90 days.

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

Zhuzhou CRRC Times  vs.  Uroica Mining Safety

Zhuzhou CRRC Times

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zhuzhou CRRC Times are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhuzhou CRRC may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Uroica Mining Safety

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uroica Mining Safety are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Uroica Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhuzhou CRRC and Uroica Mining

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

The idea behind Zhuzhou CRRC Times and Uroica Mining Safety 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.