Correlation Between Zeng Hsing and Allis Electric
Can any of the company-specific risk be diversified away by investing in both Zeng Hsing and Allis Electric 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 Zeng Hsing and Allis Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zeng Hsing Industrial and Allis Electric Co, you can compare the effects of market volatilities on Zeng Hsing and Allis Electric 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 Zeng Hsing with a short position of Allis Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zeng Hsing and Allis Electric.
Diversification Opportunities for Zeng Hsing and Allis Electric
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Zeng and Allis is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Zeng Hsing Industrial and Allis Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allis Electric and Zeng Hsing 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 Zeng Hsing Industrial are associated (or correlated) with Allis Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allis Electric has no effect on the direction of Zeng Hsing i.e., Zeng Hsing and Allis Electric go up and down completely randomly.
Pair Corralation between Zeng Hsing and Allis Electric
Assuming the 90 days trading horizon Zeng Hsing Industrial is expected to under-perform the Allis Electric. But the stock apears to be less risky and, when comparing its historical volatility, Zeng Hsing Industrial is 3.42 times less risky than Allis Electric. The stock trades about 0.0 of its potential returns per unit of risk. The Allis Electric Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8,030 in Allis Electric Co on September 3, 2024 and sell it today you would earn a total of 2,870 from holding Allis Electric Co or generate 35.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zeng Hsing Industrial vs. Allis Electric Co
Performance |
| Timeline |
| Zeng Hsing Industrial |
| Allis Electric |
Zeng Hsing and Allis Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zeng Hsing and Allis Electric
The main advantage of trading using opposite Zeng Hsing and Allis Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zeng Hsing position performs unexpectedly, Allis Electric 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 Allis Electric will offset losses from the drop in Allis Electric's long position.| Zeng Hsing vs. TTET Union Corp | Zeng Hsing vs. Shinkong Insurance Co | Zeng Hsing vs. Huaku Development Co | Zeng Hsing vs. China Steel Chemical |
| Allis Electric vs. Chung Hsin Electric Machinery | Allis Electric vs. Fortune Electric Co | Allis Electric vs. TECO Electric Machinery | Allis Electric vs. Shihlin Electric Engineering |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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