Correlation Between CHINA SOUTHN and Zhejiang Expressway

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

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

Diversification Opportunities for CHINA SOUTHN and Zhejiang Expressway

-0.44

Correlation Coefficient

CHINA SOUTHN  Zhejiang Expressway

Very good diversification

The 3 months correlation between CHINA and Zhejiang is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H and Zhejiang Expressway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Expressway and CHINA SOUTHN 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 CHINA SOUTHN AIR H are associated (or correlated) with Zhejiang Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Expressway has no effect on the direction of CHINA SOUTHN i.e., CHINA SOUTHN and Zhejiang Expressway go up and down completely randomly.

Pair Corralation between CHINA SOUTHN and Zhejiang Expressway

Assuming the 90 days trading horizon CHINA SOUTHN AIR H is expected to under-perform the Zhejiang Expressway. In addition to that, CHINA SOUTHN is 1.9 times more volatile than Zhejiang Expressway Co. It trades about -0.05 of its total potential returns per unit of risk. Zhejiang Expressway Co is currently generating about 0.07 per unit of volatility. If you would invest  66.00  in Zhejiang Expressway Co on December 22, 2024 and sell it today you would earn a total of  4.00  from holding Zhejiang Expressway Co or generate 6.06% return on investment over 90 days.

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

CHINA SOUTHN AIR H   vs.  Zhejiang Expressway Co

CHINA SOUTHN AIR

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHINA SOUTHN AIR H has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Zhejiang Expressway

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Expressway Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Zhejiang Expressway may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CHINA SOUTHN and Zhejiang Expressway

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

The idea behind CHINA SOUTHN AIR H and Zhejiang Expressway Co 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.