Correlation Between Moelis and Zhong Yang

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

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

Diversification Opportunities for Moelis and Zhong Yang

-0.35

Correlation Coefficient

Moelis  Zhong Yang

Very good diversification

The 3 months correlation between Moelis and Zhong is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Moelis Co 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 Moelis 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 Moelis Co 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 Moelis i.e., Moelis and Zhong Yang go up and down completely randomly.

Pair Corralation between Moelis and Zhong Yang

Allowing for the 90-day total investment horizon Moelis Co is expected to generate 0.31 times more return on investment than Zhong Yang. However, Moelis Co is 3.23 times less risky than Zhong Yang. It trades about 0.09 of its potential returns per unit of risk. Zhong Yang Financial is currently generating about 0.01 per unit of risk. If you would invest  6,790  in Moelis Co on August 31, 2024 and sell it today you would earn a total of  795.00  from holding Moelis Co or generate 11.71% return on investment over 90 days.

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

Moelis Co  vs.  Zhong Yang Financial

Moelis

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Moelis Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Moelis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Zhong Yang Financial

Risk-Adjusted Performance

0 of 100

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 relatively invariable basic indicators, Zhong Yang is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Moelis and Zhong Yang

The main advantage of trading using opposite Moelis and Zhong Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moelis 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 Moelis Co 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.