Correlation Between Exceed World and Zhangmen Education

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

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

Diversification Opportunities for Exceed World and Zhangmen Education

0.27

Correlation Coefficient

Exceed World  Zhangmen Education

Modest diversification

The 3 months correlation between Exceed and Zhangmen is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Exceed World and Zhangmen Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhangmen Education and Exceed World 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 Exceed World are associated (or correlated) with Zhangmen Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhangmen Education has no effect on the direction of Exceed World i.e., Exceed World and Zhangmen Education go up and down completely randomly.

Pair Corralation between Exceed World and Zhangmen Education

If you would invest  30.00  in Exceed World on September 19, 2024 and sell it today you would earn a total of  20.00  from holding Exceed World or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Exceed World  vs.  Zhangmen Education

Exceed World

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exceed World are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, Exceed World showed solid returns over the last few months and may actually be approaching a breakup point.

Zhangmen Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhangmen Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Zhangmen Education is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Exceed World and Zhangmen Education

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

The idea behind Exceed World and Zhangmen Education 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..