Correlation Between Zhejiang Construction and Guangzhou Shiyuan

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

Diversification Opportunities for Zhejiang Construction and Guangzhou Shiyuan

ZhejiangGuangzhouDiversified AwayZhejiangGuangzhouDiversified Away100%
0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Zhejiang and Guangzhou is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Construction Investme and Guangzhou Shiyuan Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Shiyuan and Zhejiang Construction 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 Zhejiang Construction Investment are associated (or correlated) with Guangzhou Shiyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Shiyuan has no effect on the direction of Zhejiang Construction i.e., Zhejiang Construction and Guangzhou Shiyuan go up and down completely randomly.

Pair Corralation between Zhejiang Construction and Guangzhou Shiyuan

If you would invest  948.00  in Zhejiang Construction Investment on September 15, 2024 and sell it today you would earn a total of  69.00  from holding Zhejiang Construction Investment or generate 7.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy4.76%
ValuesDaily Returns

Zhejiang Construction Investme  vs.  Guangzhou Shiyuan Electronic

 Performance 
JavaScript chart by amCharts 3.21.15OctNov 010203040506070
JavaScript chart by amCharts 3.21.15002761 002841
       Timeline  
Zhejiang Construction 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Construction Investment are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhejiang Construction sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec8910111213
Guangzhou Shiyuan 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Guangzhou Shiyuan Electronic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Guangzhou Shiyuan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zhejiang Construction and Guangzhou Shiyuan Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-11.64-8.72-5.79-2.870.04873.096.239.3712.51 0.0050.0100.0150.0200.025
JavaScript chart by amCharts 3.21.15002761 002841
       Returns  

Pair Trading with Zhejiang Construction and Guangzhou Shiyuan

The main advantage of trading using opposite Zhejiang Construction and Guangzhou Shiyuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhejiang Construction position performs unexpectedly, Guangzhou Shiyuan 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 Guangzhou Shiyuan will offset losses from the drop in Guangzhou Shiyuan's long position.
The idea behind Zhejiang Construction Investment and Guangzhou Shiyuan Electronic 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.
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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