Correlation Between Mentor Capital and Zhong Yang

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

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

Diversification Opportunities for Mentor Capital and Zhong Yang

-0.39

Correlation Coefficient

Mentor Capital  Zhong Yang

Very good diversification

The 3 months correlation between Mentor and Zhong is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mentor Capital 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 Mentor Capital 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 Mentor Capital 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 Mentor Capital i.e., Mentor Capital and Zhong Yang go up and down completely randomly.

Pair Corralation between Mentor Capital and Zhong Yang

Given the investment horizon of 90 days Mentor Capital is expected to generate 3.83 times more return on investment than Zhong Yang. However, Mentor Capital is 3.83 times more volatile than Zhong Yang Financial. It trades about 0.13 of its potential returns per unit of risk. Zhong Yang Financial is currently generating about -0.03 per unit of risk. If you would invest  5.00  in Mentor Capital on September 4, 2024 and sell it today you would earn a total of  1.10  from holding Mentor Capital or generate 22.0% return on investment over 90 days.

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

Mentor Capital  vs.  Zhong Yang Financial

Mentor Capital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mentor Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Mentor Capital reported 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 newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Mentor Capital and Zhong Yang

The main advantage of trading using opposite Mentor Capital and Zhong Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mentor Capital 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 Mentor Capital 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..