Correlation Between Standard Foods and ZongTai Real
Can any of the company-specific risk be diversified away by investing in both Standard Foods and ZongTai Real 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 Standard Foods and ZongTai Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Foods Corp and ZongTai Real Estate, you can compare the effects of market volatilities on Standard Foods and ZongTai Real 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 Standard Foods with a short position of ZongTai Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Foods and ZongTai Real.
Diversification Opportunities for Standard Foods and ZongTai Real
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Standard and ZongTai is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Standard Foods Corp and ZongTai Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZongTai Real Estate and Standard Foods 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 Standard Foods Corp are associated (or correlated) with ZongTai Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZongTai Real Estate has no effect on the direction of Standard Foods i.e., Standard Foods and ZongTai Real go up and down completely randomly.
Pair Corralation between Standard Foods and ZongTai Real
Assuming the 90 days trading horizon Standard Foods Corp is expected to under-perform the ZongTai Real. But the stock apears to be less risky and, when comparing its historical volatility, Standard Foods Corp is 2.19 times less risky than ZongTai Real. The stock trades about -0.08 of its potential returns per unit of risk. The ZongTai Real Estate is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,435 in ZongTai Real Estate on September 3, 2024 and sell it today you would earn a total of 25.00 from holding ZongTai Real Estate or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Foods Corp vs. ZongTai Real Estate
Performance |
| Timeline |
| Standard Foods Corp |
| ZongTai Real Estate |
Standard Foods and ZongTai Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Foods and ZongTai Real
The main advantage of trading using opposite Standard Foods and ZongTai Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Foods position performs unexpectedly, ZongTai Real 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 ZongTai Real will offset losses from the drop in ZongTai Real's long position.| Standard Foods vs. TTET Union Corp | Standard Foods vs. Uni President Enterprises Corp | Standard Foods vs. Charoen Pokphand Enterprise |
| ZongTai Real vs. Lian Hwa Foods | ZongTai Real vs. Ever Clear Environmental Eng | ZongTai Real vs. Standard Foods Corp | ZongTai Real vs. Mechema Chemicals Int |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |