Correlation Between Zinus and Namyang Dairy
Can any of the company-specific risk be diversified away by investing in both Zinus and Namyang Dairy 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 Zinus and Namyang Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zinus Inc and Namyang Dairy, you can compare the effects of market volatilities on Zinus and Namyang Dairy 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 Zinus with a short position of Namyang Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zinus and Namyang Dairy.
Diversification Opportunities for Zinus and Namyang Dairy
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Zinus and Namyang is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Zinus Inc and Namyang Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namyang Dairy and Zinus 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 Zinus Inc are associated (or correlated) with Namyang Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namyang Dairy has no effect on the direction of Zinus i.e., Zinus and Namyang Dairy go up and down completely randomly.
Pair Corralation between Zinus and Namyang Dairy
Assuming the 90 days trading horizon Zinus Inc is expected to generate 1.78 times more return on investment than Namyang Dairy. However, Zinus is 1.78 times more volatile than Namyang Dairy. It trades about 0.21 of its potential returns per unit of risk. Namyang Dairy is currently generating about -0.19 per unit of risk. If you would invest 1,947,000 in Zinus Inc on September 24, 2024 and sell it today you would earn a total of 398,000 from holding Zinus Inc or generate 20.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zinus Inc vs. Namyang Dairy
Performance |
| Timeline |
| Zinus Inc |
| Namyang Dairy |
Zinus and Namyang Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zinus and Namyang Dairy
The main advantage of trading using opposite Zinus and Namyang Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zinus position performs unexpectedly, Namyang Dairy 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 Namyang Dairy will offset losses from the drop in Namyang Dairy's long position.The idea behind Zinus Inc and Namyang Dairy 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.| Namyang Dairy vs. FoodNamoo | Namyang Dairy vs. Samlip General Foods | Namyang Dairy vs. Organic Special Pet | Namyang Dairy vs. FOODWELL 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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