Correlation Between Lazard and Zhong Yang

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

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

Diversification Opportunities for Lazard and Zhong Yang

0.56

Correlation Coefficient

Lazard  Zhong Yang

Very weak diversification

The 3 months correlation between Lazard and Zhong is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lazard and Zhong Yang Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhong Yang Financial and Lazard 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 Lazard are associated (or correlated) with Zhong Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhong Yang Financial has no effect on the direction of Lazard i.e., Lazard and Zhong Yang go up and down completely randomly.

Pair Corralation between Lazard and Zhong Yang

Considering the 90-day investment horizon Lazard is expected to under-perform the Zhong Yang. But the stock apears to be less risky and, when comparing its historical volatility, Lazard is 1.08 times less risky than Zhong Yang. The stock trades about -0.07 of its potential returns per unit of risk. The Zhong Yang Financial is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  146.00  in Zhong Yang Financial on December 28, 2024 and sell it today you would lose (13.00) from holding Zhong Yang Financial or give up 8.9% of portfolio value over 90 days.

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

Lazard  vs.  Zhong Yang Financial

Lazard

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lazard has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Zhong Yang Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zhong Yang Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Lazard and Zhong Yang

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

The idea behind Lazard and Zhong Yang Financial 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.