Correlation Between Xinhua Winshare and Zhen Ding

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

By analyzing existing cross correlation between Xinhua Winshare Publishing and Zhen Ding Technology, you can compare the effects of market volatilities on Xinhua Winshare and Zhen Ding 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 Xinhua Winshare with a short position of Zhen Ding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinhua Winshare and Zhen Ding.

Diversification Opportunities for Xinhua Winshare and Zhen Ding

0.51

Correlation Coefficient

Xinhua Winshare  Zhen Ding

Very weak diversification

The 3 months correlation between Xinhua and Zhen is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Xinhua Winshare Publishing and Zhen Ding Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhen Ding Technology and Xinhua Winshare 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 Xinhua Winshare Publishing are associated (or correlated) with Zhen Ding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhen Ding Technology has no effect on the direction of Xinhua Winshare i.e., Xinhua Winshare and Zhen Ding go up and down completely randomly.

Pair Corralation between Xinhua Winshare and Zhen Ding

Assuming the 90 days horizon Xinhua Winshare Publishing is expected to generate 1.14 times more return on investment than Zhen Ding. However, Xinhua Winshare is 1.14 times more volatile than Zhen Ding Technology. It trades about 0.07 of its potential returns per unit of risk. Zhen Ding Technology is currently generating about 0.01 per unit of risk. If you would invest  122.00  in Xinhua Winshare Publishing on October 23, 2024 and sell it today you would earn a total of  9.00  from holding Xinhua Winshare Publishing or generate 7.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

Xinhua Winshare Publishing  vs.  Zhen Ding Technology

Xinhua Winshare Publ

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xinhua Winshare Publishing are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Xinhua Winshare may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Zhen Ding Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhen Ding Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Zhen Ding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Xinhua Winshare and Zhen Ding

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

The idea behind Xinhua Winshare Publishing and Zhen Ding Technology 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.