Correlation Between Piper Sandler and Zhong Yang

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

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

Diversification Opportunities for Piper Sandler and Zhong Yang

0.73

Correlation Coefficient

Piper Sandler  Zhong Yang

Poor diversification

The 3 months correlation between Piper and Zhong is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Piper Sandler Companies 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 Piper Sandler 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 Piper Sandler Companies 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 Piper Sandler i.e., Piper Sandler and Zhong Yang go up and down completely randomly.

Pair Corralation between Piper Sandler and Zhong Yang

Given the investment horizon of 90 days Piper Sandler Companies is expected to under-perform the Zhong Yang. But the stock apears to be less risky and, when comparing its historical volatility, Piper Sandler Companies is 1.46 times less risky than Zhong Yang. The stock trades about -0.12 of its potential returns per unit of risk. The Zhong Yang Financial is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  137.00  in Zhong Yang Financial on December 27, 2024 and sell it today you would lose (7.00) from holding Zhong Yang Financial or give up 5.11% of portfolio value over 90 days.

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

Piper Sandler Companies  vs.  Zhong Yang Financial

Piper Sandler Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Piper Sandler Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Zhong Yang Financial

Risk-Adjusted Performance

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 Piper Sandler and Zhong Yang

The main advantage of trading using opposite Piper Sandler and Zhong Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Piper Sandler 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 Piper Sandler Companies 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.