Correlation Between Zhejiang Expressway and Atlas Arteria

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

By analyzing existing cross correlation between Zhejiang Expressway Co and Atlas Arteria Limited, you can compare the effects of market volatilities on Zhejiang Expressway and Atlas Arteria 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 Zhejiang Expressway with a short position of Atlas Arteria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Expressway and Atlas Arteria.

Diversification Opportunities for Zhejiang Expressway and Atlas Arteria

0.0

Correlation Coefficient

Zhejiang Expressway  Atlas Arteria

Pay attention - limited upside

The 3 months correlation between Zhejiang and Atlas is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Expressway Co and Atlas Arteria Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Arteria Limited and Zhejiang Expressway 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 Zhejiang Expressway Co are associated (or correlated) with Atlas Arteria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Arteria Limited has no effect on the direction of Zhejiang Expressway i.e., Zhejiang Expressway and Atlas Arteria go up and down completely randomly.

Pair Corralation between Zhejiang Expressway and Atlas Arteria

If you would invest  273.00  in Atlas Arteria Limited on December 21, 2024 and sell it today you would earn a total of  37.00  from holding Atlas Arteria Limited or generate 13.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	79.66%
Values	Daily Returns

Zhejiang Expressway Co  vs.  Atlas Arteria Limited

Zhejiang Expressway

Risk-Adjusted Performance

Very Weak

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

Atlas Arteria Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Arteria Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Atlas Arteria reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhejiang Expressway and Atlas Arteria

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

The idea behind Zhejiang Expressway Co and Atlas Arteria Limited 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.