Correlation Between Zhuzhou CRRC and Zhongtong Guomai

Can any of the company-specific risk be diversified away by investing in both Zhuzhou CRRC and Zhongtong Guomai 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 Zhongtong Guomai 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 Zhongtong Guomai Communication, you can compare the effects of market volatilities on Zhuzhou CRRC and Zhongtong Guomai 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 Zhongtong Guomai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhuzhou CRRC and Zhongtong Guomai.

Diversification Opportunities for Zhuzhou CRRC and Zhongtong Guomai

-0.05

Correlation Coefficient

Zhuzhou CRRC  Zhongtong Guomai

Good diversification

The 3 months correlation between Zhuzhou and Zhongtong is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Zhuzhou CRRC Times and Zhongtong Guomai Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongtong Guomai Com 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 Zhongtong Guomai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongtong Guomai Com has no effect on the direction of Zhuzhou CRRC i.e., Zhuzhou CRRC and Zhongtong Guomai go up and down completely randomly.

Pair Corralation between Zhuzhou CRRC and Zhongtong Guomai

Assuming the 90 days trading horizon Zhuzhou CRRC Times is expected to generate 0.53 times more return on investment than Zhongtong Guomai. However, Zhuzhou CRRC Times is 1.88 times less risky than Zhongtong Guomai. It trades about 0.08 of its potential returns per unit of risk. Zhongtong Guomai Communication is currently generating about -0.03 per unit of risk. If you would invest  4,496  in Zhuzhou CRRC Times on September 27, 2024 and sell it today you would earn a total of  119.00  from holding Zhuzhou CRRC Times or generate 2.65% return on investment over 90 days.

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

Zhuzhou CRRC Times  vs.  Zhongtong Guomai Communication

Zhuzhou CRRC Times

Risk-Adjusted Performance

0 of 100

Very Weak

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

Zhongtong Guomai Com

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongtong Guomai Communication are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhongtong Guomai sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhuzhou CRRC and Zhongtong Guomai

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

The idea behind Zhuzhou CRRC Times and Zhongtong Guomai Communication 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.