Correlation Between Yunnan Aluminium and Zhejiang Zhengguang
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By analyzing existing cross correlation between Yunnan Aluminium Co and Zhejiang Zhengguang Industrial, you can compare the effects of market volatilities on Yunnan Aluminium and Zhejiang Zhengguang 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 Yunnan Aluminium with a short position of Zhejiang Zhengguang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yunnan Aluminium and Zhejiang Zhengguang.
Diversification Opportunities for Yunnan Aluminium and Zhejiang Zhengguang
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Yunnan and Zhejiang is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Yunnan Aluminium Co and Zhejiang Zhengguang Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Zhengguang and Yunnan Aluminium 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 Yunnan Aluminium Co are associated (or correlated) with Zhejiang Zhengguang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Zhengguang has no effect on the direction of Yunnan Aluminium i.e., Yunnan Aluminium and Zhejiang Zhengguang go up and down completely randomly.
Pair Corralation between Yunnan Aluminium and Zhejiang Zhengguang
Assuming the 90 days trading horizon Yunnan Aluminium is expected to generate 1.2 times less return on investment than Zhejiang Zhengguang. But when comparing it to its historical volatility, Yunnan Aluminium Co is 1.54 times less risky than Zhejiang Zhengguang. It trades about 0.02 of its potential returns per unit of risk. Zhejiang Zhengguang Industrial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,553 in Zhejiang Zhengguang Industrial on September 4, 2024 and sell it today you would earn a total of 13.00 from holding Zhejiang Zhengguang Industrial or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.72% |
| Values | Daily Returns |
Yunnan Aluminium Co vs. Zhejiang Zhengguang Industrial
Performance |
| Timeline |
| Yunnan Aluminium |
| Zhejiang Zhengguang |
Yunnan Aluminium and Zhejiang Zhengguang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yunnan Aluminium and Zhejiang Zhengguang
The main advantage of trading using opposite Yunnan Aluminium and Zhejiang Zhengguang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yunnan Aluminium position performs unexpectedly, Zhejiang Zhengguang 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 Zhengguang will offset losses from the drop in Zhejiang Zhengguang's long position.| Yunnan Aluminium vs. Zijin Mining Group | Yunnan Aluminium vs. Wanhua Chemical Group | Yunnan Aluminium vs. Baoshan Iron Steel | Yunnan Aluminium vs. Rongsheng Petrochemical Co |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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