Correlation Between GalaxyCore and Zhengping RoadBridge

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

By analyzing existing cross correlation between GalaxyCore and Zhengping RoadBridge Constr, you can compare the effects of market volatilities on GalaxyCore and Zhengping RoadBridge 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 GalaxyCore with a short position of Zhengping RoadBridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of GalaxyCore and Zhengping RoadBridge.

Diversification Opportunities for GalaxyCore and Zhengping RoadBridge

0.03

Correlation Coefficient

GalaxyCore  Zhengping RoadBridge

Significant diversification

The 3 months correlation between GalaxyCore and Zhengping is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding GalaxyCore and Zhengping RoadBridge Constr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhengping RoadBridge and GalaxyCore 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 GalaxyCore are associated (or correlated) with Zhengping RoadBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhengping RoadBridge has no effect on the direction of GalaxyCore i.e., GalaxyCore and Zhengping RoadBridge go up and down completely randomly.

Pair Corralation between GalaxyCore and Zhengping RoadBridge

Assuming the 90 days trading horizon GalaxyCore is expected to generate 1.77 times less return on investment than Zhengping RoadBridge. But when comparing it to its historical volatility, GalaxyCore is 1.01 times less risky than Zhengping RoadBridge. It trades about 0.05 of its potential returns per unit of risk. Zhengping RoadBridge Constr is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  254.00  in Zhengping RoadBridge Constr on October 4, 2024 and sell it today you would earn a total of  107.00  from holding Zhengping RoadBridge Constr or generate 42.13% return on investment over 90 days.

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

GalaxyCore  vs.  Zhengping RoadBridge Constr

GalaxyCore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GalaxyCore 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.

Zhengping RoadBridge

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with GalaxyCore and Zhengping RoadBridge

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

The idea behind GalaxyCore and Zhengping RoadBridge Constr 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.