Correlation Between Zotye Automobile and Caihong Display
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By analyzing existing cross correlation between Zotye Automobile Co and Caihong Display Devices, you can compare the effects of market volatilities on Zotye Automobile and Caihong Display 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 Zotye Automobile with a short position of Caihong Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zotye Automobile and Caihong Display.
Diversification Opportunities for Zotye Automobile and Caihong Display
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Zotye and Caihong is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Zotye Automobile Co and Caihong Display Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caihong Display Devices and Zotye Automobile 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 Zotye Automobile Co are associated (or correlated) with Caihong Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caihong Display Devices has no effect on the direction of Zotye Automobile i.e., Zotye Automobile and Caihong Display go up and down completely randomly.
Pair Corralation between Zotye Automobile and Caihong Display
Assuming the 90 days trading horizon Zotye Automobile is expected to generate 1.44 times less return on investment than Caihong Display. In addition to that, Zotye Automobile is 1.52 times more volatile than Caihong Display Devices. It trades about 0.03 of its total potential returns per unit of risk. Caihong Display Devices is currently generating about 0.06 per unit of volatility. If you would invest 460.00 in Caihong Display Devices on August 31, 2024 and sell it today you would earn a total of 237.00 from holding Caihong Display Devices or generate 51.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zotye Automobile Co vs. Caihong Display Devices
Performance |
| Timeline |
| Zotye Automobile |
| Caihong Display Devices |
Zotye Automobile and Caihong Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zotye Automobile and Caihong Display
The main advantage of trading using opposite Zotye Automobile and Caihong Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zotye Automobile position performs unexpectedly, Caihong Display 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 Caihong Display will offset losses from the drop in Caihong Display's long position.| Zotye Automobile vs. China State Construction | Zotye Automobile vs. China Merchants Shekou | Zotye Automobile vs. Huafa Industrial Co | Zotye Automobile vs. China International Capital |
| Caihong Display vs. Guangzhou Boji Medical | Caihong Display vs. Touchstone International Medical | Caihong Display vs. CICC Fund Management | Caihong Display vs. CareRay Digital Medical |
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.
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