Correlation Between DIeteren Group and Zhongsheng Group

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

By analyzing existing cross correlation between DIeteren Group SA and Zhongsheng Group Holdings, you can compare the effects of market volatilities on DIeteren Group and Zhongsheng Group 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 DIeteren Group with a short position of Zhongsheng Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIeteren Group and Zhongsheng Group.

Diversification Opportunities for DIeteren Group and Zhongsheng Group

0.38

Correlation Coefficient

DIeteren Group  Zhongsheng Group

Weak diversification

The 3 months correlation between DIeteren and Zhongsheng is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding DIeteren Group SA and Zhongsheng Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongsheng Group Holdings and DIeteren Group 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 DIeteren Group SA are associated (or correlated) with Zhongsheng Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongsheng Group Holdings has no effect on the direction of DIeteren Group i.e., DIeteren Group and Zhongsheng Group go up and down completely randomly.

Pair Corralation between DIeteren Group and Zhongsheng Group

Assuming the 90 days trading horizon DIeteren Group SA is expected to generate 1.55 times more return on investment than Zhongsheng Group. However, DIeteren Group is 1.55 times more volatile than Zhongsheng Group Holdings. It trades about 0.24 of its potential returns per unit of risk. Zhongsheng Group Holdings is currently generating about -0.18 per unit of risk. If you would invest  12,824  in DIeteren Group SA on September 23, 2024 and sell it today you would earn a total of  3,166  from holding DIeteren Group SA or generate 24.69% return on investment over 90 days.

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

DIeteren Group SA  vs.  Zhongsheng Group Holdings

DIeteren Group SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DIeteren Group SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, DIeteren Group reported solid returns over the last few months and may actually be approaching a breakup point.

Zhongsheng Group Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongsheng Group Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Zhongsheng Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DIeteren Group and Zhongsheng Group

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

The idea behind DIeteren Group SA and Zhongsheng Group Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.