Correlation Between Zhong Yang and Lazard

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

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

Diversification Opportunities for Zhong Yang and Lazard

0.61

Correlation Coefficient

Zhong Yang  Lazard

Poor diversification

The 3 months correlation between Zhong and Lazard is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Zhong Yang Financial and Lazard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard and Zhong Yang 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 Zhong Yang Financial are associated (or correlated) with Lazard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard has no effect on the direction of Zhong Yang i.e., Zhong Yang and Lazard go up and down completely randomly.

Pair Corralation between Zhong Yang and Lazard

Considering the 90-day investment horizon Zhong Yang Financial is expected to generate 1.13 times more return on investment than Lazard. However, Zhong Yang is 1.13 times more volatile than Lazard. It trades about -0.01 of its potential returns per unit of risk. Lazard is currently generating about -0.07 per unit of risk. 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

Zhong Yang Financial  vs.  Lazard

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.

Lazard

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lazard has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Zhong Yang and Lazard

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

The idea behind Zhong Yang Financial and Lazard 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.