Correlation Between Zhong Yang and Lion Group

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

Diversification Opportunities for Zhong Yang and Lion Group

0.41

Correlation Coefficient

Zhong Yang  Lion Group

Very weak diversification

The 3 months correlation between Zhong and Lion is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Zhong Yang Financial and Lion Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Group Holding 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 Lion Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Group Holding has no effect on the direction of Zhong Yang i.e., Zhong Yang and Lion Group go up and down completely randomly.

Pair Corralation between Zhong Yang and Lion Group

Considering the 90-day investment horizon Zhong Yang Financial is expected to under-perform the Lion Group. But the stock apears to be less risky and, when comparing its historical volatility, Zhong Yang Financial is 2.54 times less risky than Lion Group. The stock trades about -0.1 of its potential returns per unit of risk. The Lion Group Holding is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Lion Group Holding on November 29, 2024 and sell it today you would lose (4.00) from holding Lion Group Holding or give up 20.0% of portfolio value over 90 days.

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

Zhong Yang Financial  vs.  Lion Group Holding

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 conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Lion Group Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lion Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Lion Group is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Zhong Yang and Lion Group

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

The idea behind Zhong Yang Financial and Lion Group Holding 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.