Correlation Between Zhejiang Orient and Emdoor Information

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

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

Diversification Opportunities for Zhejiang Orient and Emdoor Information

-0.47

Correlation Coefficient

Zhejiang Orient  Emdoor Information

Very good diversification

The 3 months correlation between Zhejiang and Emdoor is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Orient Gene and Emdoor Information Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emdoor Information and Zhejiang Orient 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 Orient Gene are associated (or correlated) with Emdoor Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emdoor Information has no effect on the direction of Zhejiang Orient i.e., Zhejiang Orient and Emdoor Information go up and down completely randomly.

Pair Corralation between Zhejiang Orient and Emdoor Information

Assuming the 90 days trading horizon Zhejiang Orient Gene is expected to under-perform the Emdoor Information. But the stock apears to be less risky and, when comparing its historical volatility, Zhejiang Orient Gene is 1.36 times less risky than Emdoor Information. The stock trades about -0.1 of its potential returns per unit of risk. The Emdoor Information Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,110  in Emdoor Information Co on October 9, 2024 and sell it today you would earn a total of  849.00  from holding Emdoor Information Co or generate 20.66% return on investment over 90 days.

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

Zhejiang Orient Gene  vs.  Emdoor Information Co

Zhejiang Orient Gene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhejiang Orient Gene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Emdoor Information

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emdoor Information Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Emdoor Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhejiang Orient and Emdoor Information

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

The idea behind Zhejiang Orient Gene and Emdoor Information Co 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.