Correlation Between Eastern Communications and Zhende Medical

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Can any of the company-specific risk be diversified away by investing in both Eastern Communications and Zhende Medical 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 Eastern Communications and Zhende Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Communications Co and Zhende Medical Co, you can compare the effects of market volatilities on Eastern Communications and Zhende Medical 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 Eastern Communications with a short position of Zhende Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Communications and Zhende Medical.

Diversification Opportunities for Eastern Communications and Zhende Medical

EasternZhendeDiversified AwayEasternZhendeDiversified Away100%
0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Eastern and Zhende is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Communications Co and Zhende Medical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhende Medical and Eastern Communications 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 Eastern Communications Co are associated (or correlated) with Zhende Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhende Medical has no effect on the direction of Eastern Communications i.e., Eastern Communications and Zhende Medical go up and down completely randomly.

Pair Corralation between Eastern Communications and Zhende Medical

Assuming the 90 days trading horizon Eastern Communications Co is expected to generate 1.16 times more return on investment than Zhende Medical. However, Eastern Communications is 1.16 times more volatile than Zhende Medical Co. It trades about 0.01 of its potential returns per unit of risk. Zhende Medical Co is currently generating about -0.05 per unit of risk. If you would invest  41.00  in Eastern Communications Co on October 23, 2024 and sell it today you would lose (1.00) from holding Eastern Communications Co or give up 2.44% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Eastern Communications Co  vs.  Zhende Medical Co

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -50510
JavaScript chart by amCharts 3.21.15900941 603301
       Timeline  
Eastern Communications 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Eastern Communications Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Eastern Communications is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.370.380.390.40.410.420.430.440.45
Zhende Medical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Zhende Medical Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Zhende Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2021222324

Eastern Communications and Zhende Medical Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.23-5.42-3.6-1.780.01.773.595.427.259.07 0.050.100.150.20
JavaScript chart by amCharts 3.21.15900941 603301
       Returns  

Pair Trading with Eastern Communications and Zhende Medical

The main advantage of trading using opposite Eastern Communications and Zhende Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Communications position performs unexpectedly, Zhende Medical 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 Zhende Medical will offset losses from the drop in Zhende Medical's long position.
The idea behind Eastern Communications Co and Zhende Medical 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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