Correlation Between LOANDEPOT INC and Zhaojin Mining

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

By analyzing existing cross correlation between LOANDEPOT INC A and Zhaojin Mining Industry, you can compare the effects of market volatilities on LOANDEPOT INC and Zhaojin Mining 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 LOANDEPOT INC with a short position of Zhaojin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOANDEPOT INC and Zhaojin Mining.

Diversification Opportunities for LOANDEPOT INC and Zhaojin Mining

-0.43

Correlation Coefficient

LOANDEPOT INC  Zhaojin Mining

Very good diversification

The 3 months correlation between LOANDEPOT and Zhaojin is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding LOANDEPOT INC A and Zhaojin Mining Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhaojin Mining Industry and LOANDEPOT INC 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 LOANDEPOT INC A are associated (or correlated) with Zhaojin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhaojin Mining Industry has no effect on the direction of LOANDEPOT INC i.e., LOANDEPOT INC and Zhaojin Mining go up and down completely randomly.

Pair Corralation between LOANDEPOT INC and Zhaojin Mining

Assuming the 90 days horizon LOANDEPOT INC A is expected to under-perform the Zhaojin Mining. In addition to that, LOANDEPOT INC is 1.63 times more volatile than Zhaojin Mining Industry. It trades about -0.03 of its total potential returns per unit of risk. Zhaojin Mining Industry is currently generating about 0.3 per unit of volatility. If you would invest  125.00  in Zhaojin Mining Industry on October 27, 2024 and sell it today you would earn a total of  21.00  from holding Zhaojin Mining Industry or generate 16.8% return on investment over 90 days.

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

LOANDEPOT INC A  vs.  Zhaojin Mining Industry

LOANDEPOT INC A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOANDEPOT INC A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Zhaojin Mining Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhaojin Mining Industry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Zhaojin Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LOANDEPOT INC and Zhaojin Mining

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

The idea behind LOANDEPOT INC A and Zhaojin Mining Industry 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..