Correlation Between Xinhua Winshare and ZTE

Can any of the company-specific risk be diversified away by investing in both Xinhua Winshare and ZTE 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 ZTE 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 ZTE Corporation, you can compare the effects of market volatilities on Xinhua Winshare and ZTE 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 ZTE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinhua Winshare and ZTE.

Diversification Opportunities for Xinhua Winshare and ZTE

-0.33

Correlation Coefficient

Xinhua Winshare  ZTE

Very good diversification

The 3 months correlation between Xinhua and ZTE is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Xinhua Winshare Publishing and ZTE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTE Corporation 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 ZTE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZTE Corporation has no effect on the direction of Xinhua Winshare i.e., Xinhua Winshare and ZTE go up and down completely randomly.

Pair Corralation between Xinhua Winshare and ZTE

Assuming the 90 days horizon Xinhua Winshare Publishing is expected to under-perform the ZTE. But the stock apears to be less risky and, when comparing its historical volatility, Xinhua Winshare Publishing is 2.39 times less risky than ZTE. The stock trades about -0.11 of its potential returns per unit of risk. The ZTE Corporation is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  304.00  in ZTE Corporation on December 28, 2024 and sell it today you would lose (20.00) from holding ZTE Corporation or give up 6.58% of portfolio value over 90 days.

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

Xinhua Winshare Publishing  vs.  ZTE Corp.

Xinhua Winshare Publ

Risk-Adjusted Performance

Very Weak

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

ZTE Corporation

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Xinhua Winshare and ZTE

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

The idea behind Xinhua Winshare Publishing and ZTE Corporation 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.