Correlation Between Netcapital and Zhong Yang

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

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

Diversification Opportunities for Netcapital and Zhong Yang

0.11

Correlation Coefficient

Netcapital  Zhong Yang

Average diversification

The 3 months correlation between Netcapital and Zhong is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Netcapital 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 Netcapital 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 Netcapital 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 Netcapital i.e., Netcapital and Zhong Yang go up and down completely randomly.

Pair Corralation between Netcapital and Zhong Yang

Given the investment horizon of 90 days Netcapital is expected to under-perform the Zhong Yang. But the stock apears to be less risky and, when comparing its historical volatility, Netcapital is 1.37 times less risky than Zhong Yang. The stock trades about -0.05 of its potential returns per unit of risk. The Zhong Yang Financial is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  210.00  in Zhong Yang Financial on August 31, 2024 and sell it today you would lose (46.00) from holding Zhong Yang Financial or give up 21.9% of portfolio value over 90 days.

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

Netcapital  vs.  Zhong Yang Financial

Netcapital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Netcapital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 Netcapital and Zhong Yang

The main advantage of trading using opposite Netcapital and Zhong Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netcapital 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 Netcapital 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.