Correlation Between Ecotel Communication and Zhengzhou Coal

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

By analyzing existing cross correlation between ecotel communication ag and Zhengzhou Coal Mining, you can compare the effects of market volatilities on Ecotel Communication and Zhengzhou Coal 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 Ecotel Communication with a short position of Zhengzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecotel Communication and Zhengzhou Coal.

Diversification Opportunities for Ecotel Communication and Zhengzhou Coal

-0.37

Correlation Coefficient

Ecotel Communication  Zhengzhou Coal

Very good diversification

The 3 months correlation between Ecotel and Zhengzhou is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ecotel communication ag and Zhengzhou Coal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhengzhou Coal Mining and Ecotel Communication 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 ecotel communication ag are associated (or correlated) with Zhengzhou Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhengzhou Coal Mining has no effect on the direction of Ecotel Communication i.e., Ecotel Communication and Zhengzhou Coal go up and down completely randomly.

Pair Corralation between Ecotel Communication and Zhengzhou Coal

Assuming the 90 days trading horizon Ecotel Communication is expected to generate 11.95 times less return on investment than Zhengzhou Coal. But when comparing it to its historical volatility, ecotel communication ag is 1.96 times less risky than Zhengzhou Coal. It trades about 0.02 of its potential returns per unit of risk. Zhengzhou Coal Mining is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  123.00  in Zhengzhou Coal Mining on December 23, 2024 and sell it today you would earn a total of  21.00  from holding Zhengzhou Coal Mining or generate 17.07% return on investment over 90 days.

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

ecotel communication ag  vs.  Zhengzhou Coal Mining

ecotel communication

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ecotel communication ag are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Ecotel Communication is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Zhengzhou Coal Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zhengzhou Coal Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Zhengzhou Coal reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecotel Communication and Zhengzhou Coal

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

The idea behind ecotel communication ag and Zhengzhou Coal Mining 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.