Correlation Between Zhong Yang and Piper Sandler

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

Diversification Opportunities for Zhong Yang and Piper Sandler

-0.28

Correlation Coefficient

Zhong Yang  Piper Sandler

Very good diversification

The 3 months correlation between Zhong and Piper is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Zhong Yang Financial and Piper Sandler Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piper Sandler Companies 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 Piper Sandler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piper Sandler Companies has no effect on the direction of Zhong Yang i.e., Zhong Yang and Piper Sandler go up and down completely randomly.

Pair Corralation between Zhong Yang and Piper Sandler

Considering the 90-day investment horizon Zhong Yang Financial is expected to under-perform the Piper Sandler. In addition to that, Zhong Yang is 4.08 times more volatile than Piper Sandler Companies. It trades about -0.02 of its total potential returns per unit of risk. Piper Sandler Companies is currently generating about 0.14 per unit of volatility. If you would invest  12,297  in Piper Sandler Companies on August 31, 2024 and sell it today you would earn a total of  21,874  from holding Piper Sandler Companies or generate 177.88% return on investment over 90 days.

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

Zhong Yang Financial  vs.  Piper Sandler Companies

Zhong Yang Financial

Risk-Adjusted Performance

0 of 100

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.

Piper Sandler Companies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Piper Sandler Companies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Piper Sandler reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhong Yang and Piper Sandler

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

The idea behind Zhong Yang Financial and Piper Sandler Companies 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.