Correlation Between Zhongsheng Group and Consumer Automotive

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

By analyzing existing cross correlation between Zhongsheng Group Holdings and Consumer Automotive Finance, you can compare the effects of market volatilities on Zhongsheng Group and Consumer Automotive 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 Zhongsheng Group with a short position of Consumer Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongsheng Group and Consumer Automotive.

Diversification Opportunities for Zhongsheng Group and Consumer Automotive

1.0

Correlation Coefficient

Zhongsheng Group  Consumer Automotive

No risk reduction

The 3 months correlation between Zhongsheng and Consumer is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Zhongsheng Group Holdings and Consumer Automotive Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Automotive and Zhongsheng Group 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 Zhongsheng Group Holdings are associated (or correlated) with Consumer Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Automotive has no effect on the direction of Zhongsheng Group i.e., Zhongsheng Group and Consumer Automotive go up and down completely randomly.

Pair Corralation between Zhongsheng Group and Consumer Automotive

If you would invest  0.01  in Consumer Automotive Finance on December 23, 2024 and sell it today you would earn a total of  0.00  from holding Consumer Automotive Finance or generate 0.0% return on investment over 90 days.

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

Zhongsheng Group Holdings  vs.  Consumer Automotive Finance

Zhongsheng Group Holdings

Risk-Adjusted Performance

Very Weak

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

Consumer Automotive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Consumer Automotive Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Consumer Automotive is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Zhongsheng Group and Consumer Automotive

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

The idea behind Zhongsheng Group Holdings and Consumer Automotive Finance 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.