Correlation Between Shaanxi Meineng and Zhejiang Daily

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Can any of the company-specific risk be diversified away by investing in both Shaanxi Meineng and Zhejiang Daily 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 Shaanxi Meineng and Zhejiang Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shaanxi Meineng Clean and Zhejiang Daily Media, you can compare the effects of market volatilities on Shaanxi Meineng and Zhejiang Daily 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 Shaanxi Meineng with a short position of Zhejiang Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaanxi Meineng and Zhejiang Daily.

Diversification Opportunities for Shaanxi Meineng and Zhejiang Daily

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Shaanxi and Zhejiang is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Shaanxi Meineng Clean and Zhejiang Daily Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Daily Media and Shaanxi Meineng 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 Shaanxi Meineng Clean are associated (or correlated) with Zhejiang Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Daily Media has no effect on the direction of Shaanxi Meineng i.e., Shaanxi Meineng and Zhejiang Daily go up and down completely randomly.

Pair Corralation between Shaanxi Meineng and Zhejiang Daily

Assuming the 90 days trading horizon Shaanxi Meineng Clean is expected to under-perform the Zhejiang Daily. But the stock apears to be less risky and, when comparing its historical volatility, Shaanxi Meineng Clean is 1.09 times less risky than Zhejiang Daily. The stock trades about -0.07 of its potential returns per unit of risk. The Zhejiang Daily Media is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,128  in Zhejiang Daily Media on September 13, 2024 and sell it today you would earn a total of  17.00  from holding Zhejiang Daily Media or generate 1.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Shaanxi Meineng Clean  vs.  Zhejiang Daily Media

 Performance 
       Timeline  
Shaanxi Meineng Clean 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Shaanxi Meineng Clean are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shaanxi Meineng sustained solid returns over the last few months and may actually be approaching a breakup point.
Zhejiang Daily Media 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Daily Media are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhejiang Daily sustained solid returns over the last few months and may actually be approaching a breakup point.

Shaanxi Meineng and Zhejiang Daily Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shaanxi Meineng and Zhejiang Daily

The main advantage of trading using opposite Shaanxi Meineng and Zhejiang Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaanxi Meineng position performs unexpectedly, Zhejiang Daily 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 Daily will offset losses from the drop in Zhejiang Daily's long position.
The idea behind Shaanxi Meineng Clean and Zhejiang Daily Media 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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