Correlation Between Max Zipper and China Metal

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

By analyzing existing cross correlation between Max Zipper Co and China Metal Products, you can compare the effects of market volatilities on Max Zipper and China Metal 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 Max Zipper with a short position of China Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Max Zipper and China Metal.

Diversification Opportunities for Max Zipper and China Metal

-0.18

Correlation Coefficient

Max Zipper  China Metal

Good diversification

The 3 months correlation between Max and China is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Max Zipper Co and China Metal Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Metal Products and Max Zipper 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 Max Zipper Co are associated (or correlated) with China Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Metal Products has no effect on the direction of Max Zipper i.e., Max Zipper and China Metal go up and down completely randomly.

Pair Corralation between Max Zipper and China Metal

Assuming the 90 days trading horizon Max Zipper Co is expected to generate 2.0 times more return on investment than China Metal. However, Max Zipper is 2.0 times more volatile than China Metal Products. It trades about 0.07 of its potential returns per unit of risk. China Metal Products is currently generating about 0.01 per unit of risk. If you would invest  4,125  in Max Zipper Co on October 4, 2024 and sell it today you would earn a total of  5,155  from holding Max Zipper Co or generate 124.97% return on investment over 90 days.

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

Max Zipper Co  vs.  China Metal Products

Max Zipper

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Max Zipper Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Max Zipper may actually be approaching a critical reversion point that can send shares even higher in February 2025.

China Metal Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Metal Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Max Zipper and China Metal

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

The idea behind Max Zipper Co and China Metal Products 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.