Correlation Between Pure Storage and Zhejiang Expressway

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

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

Diversification Opportunities for Pure Storage and Zhejiang Expressway

-0.65

Correlation Coefficient

Pure Storage  Zhejiang Expressway

Excellent diversification

The 3 months correlation between Pure and Zhejiang is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and Zhejiang Expressway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Expressway and Pure Storage 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 Pure Storage are associated (or correlated) with Zhejiang Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Expressway has no effect on the direction of Pure Storage i.e., Pure Storage and Zhejiang Expressway go up and down completely randomly.

Pair Corralation between Pure Storage and Zhejiang Expressway

If you would invest  6,381  in Pure Storage on October 10, 2024 and sell it today you would lose (12.00) from holding Pure Storage or give up 0.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Pure Storage  vs.  Zhejiang Expressway Co

Pure Storage

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Storage are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Pure Storage reported solid returns over the last few months and may actually be approaching a breakup point.

Zhejiang Expressway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhejiang Expressway Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pure Storage and Zhejiang Expressway

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

The idea behind Pure Storage and Zhejiang Expressway Co 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.