Correlation Between Ethereum and Zhongfu Information

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

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

Diversification Opportunities for Ethereum and Zhongfu Information

0.36

Correlation Coefficient

Ethereum  Zhongfu Information

Weak diversification

The 3 months correlation between Ethereum and Zhongfu is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Zhongfu Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongfu Information and Ethereum 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 Ethereum are associated (or correlated) with Zhongfu Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongfu Information has no effect on the direction of Ethereum i.e., Ethereum and Zhongfu Information go up and down completely randomly.

Pair Corralation between Ethereum and Zhongfu Information

Assuming the 90 days trading horizon Ethereum is expected to generate 1.07 times more return on investment than Zhongfu Information. However, Ethereum is 1.07 times more volatile than Zhongfu Information. It trades about -0.16 of its potential returns per unit of risk. Zhongfu Information is currently generating about -0.36 per unit of risk. If you would invest  383,497  in Ethereum on October 11, 2024 and sell it today you would lose (50,446) from holding Ethereum or give up 13.15% of portfolio value over 90 days.

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

Ethereum  vs.  Zhongfu Information

Ethereum

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Ethereum exhibited solid returns over the last few months and may actually be approaching a breakup point.

Zhongfu Information

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongfu Information are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhongfu Information may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ethereum and Zhongfu Information

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

The idea behind Ethereum and Zhongfu Information 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.