Correlation Between Zoje Resources and Tongxing Environmental
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By analyzing existing cross correlation between Zoje Resources Investment and Tongxing Environmental Protection, you can compare the effects of market volatilities on Zoje Resources and Tongxing Environmental 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 Zoje Resources with a short position of Tongxing Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoje Resources and Tongxing Environmental.
Diversification Opportunities for Zoje Resources and Tongxing Environmental
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zoje and Tongxing is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Zoje Resources Investment and Tongxing Environmental Protect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tongxing Environmental and Zoje Resources 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 Zoje Resources Investment are associated (or correlated) with Tongxing Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tongxing Environmental has no effect on the direction of Zoje Resources i.e., Zoje Resources and Tongxing Environmental go up and down completely randomly.
Pair Corralation between Zoje Resources and Tongxing Environmental
Assuming the 90 days trading horizon Zoje Resources Investment is expected to generate 1.01 times more return on investment than Tongxing Environmental. However, Zoje Resources is 1.01 times more volatile than Tongxing Environmental Protection. It trades about 0.04 of its potential returns per unit of risk. Tongxing Environmental Protection is currently generating about -0.09 per unit of risk. If you would invest 239.00 in Zoje Resources Investment on October 26, 2024 and sell it today you would earn a total of 10.00 from holding Zoje Resources Investment or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zoje Resources Investment vs. Tongxing Environmental Protect
Performance |
| Timeline |
| Zoje Resources Investment |
| Tongxing Environmental |
Zoje Resources and Tongxing Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoje Resources and Tongxing Environmental
The main advantage of trading using opposite Zoje Resources and Tongxing Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoje Resources position performs unexpectedly, Tongxing Environmental 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 Tongxing Environmental will offset losses from the drop in Tongxing Environmental's long position.| Zoje Resources vs. PetroChina Co Ltd | Zoje Resources vs. Industrial and Commercial | Zoje Resources vs. China Petroleum Chemical | Zoje Resources vs. China Construction Bank |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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