Correlation Between Consumer Automotive and Zhongsheng Group

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

By analyzing existing cross correlation between Consumer Automotive Finance and Zhongsheng Group Holdings, you can compare the effects of market volatilities on Consumer Automotive and Zhongsheng Group 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 Consumer Automotive with a short position of Zhongsheng Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Automotive and Zhongsheng Group.

Diversification Opportunities for Consumer Automotive and Zhongsheng Group

1.0

Correlation Coefficient

Consumer Automotive  Zhongsheng Group

No risk reduction

The 3 months correlation between Consumer and Zhongsheng is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Automotive Finance and Zhongsheng Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongsheng Group Holdings and Consumer Automotive 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 Consumer Automotive Finance are associated (or correlated) with Zhongsheng Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongsheng Group Holdings has no effect on the direction of Consumer Automotive i.e., Consumer Automotive and Zhongsheng Group go up and down completely randomly.

Pair Corralation between Consumer Automotive and Zhongsheng Group

If you would invest  256.00  in Zhongsheng Group Holdings on December 23, 2024 and sell it today you would earn a total of  0.00  from holding Zhongsheng Group Holdings or generate 0.0% return on investment over 90 days.

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

Consumer Automotive Finance  vs.  Zhongsheng Group Holdings

Consumer Automotive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Consumer Automotive Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Consumer Automotive is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Zhongsheng Group Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Consumer Automotive and Zhongsheng Group

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

The idea behind Consumer Automotive Finance and Zhongsheng Group Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.