Correlation Between ANGLO ASIAN and Zhejiang Expressway

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

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

Diversification Opportunities for ANGLO ASIAN and Zhejiang Expressway

0.13

Correlation Coefficient

ANGLO ASIAN  Zhejiang Expressway

Average diversification

The 3 months correlation between ANGLO and Zhejiang is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding ANGLO ASIAN MINING and Zhejiang Expressway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Expressway and ANGLO ASIAN 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 ANGLO ASIAN MINING are associated (or correlated) with Zhejiang Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Expressway has no effect on the direction of ANGLO ASIAN i.e., ANGLO ASIAN and Zhejiang Expressway go up and down completely randomly.

Pair Corralation between ANGLO ASIAN and Zhejiang Expressway

Assuming the 90 days trading horizon ANGLO ASIAN MINING is expected to under-perform the Zhejiang Expressway. But the stock apears to be less risky and, when comparing its historical volatility, ANGLO ASIAN MINING is 1.03 times less risky than Zhejiang Expressway. The stock trades about -0.1 of its potential returns per unit of risk. The Zhejiang Expressway Co is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  63.00  in Zhejiang Expressway Co on October 10, 2024 and sell it today you would earn a total of  3.00  from holding Zhejiang Expressway Co or generate 4.76% return on investment over 90 days.

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

ANGLO ASIAN MINING  vs.  Zhejiang Expressway Co

ANGLO ASIAN MINING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANGLO ASIAN MINING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ANGLO ASIAN is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Zhejiang Expressway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhejiang Expressway Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Zhejiang Expressway is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ANGLO ASIAN and Zhejiang Expressway

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

The idea behind ANGLO ASIAN MINING and Zhejiang Expressway 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.