Correlation Between Zeng Hsing and Grape King
Can any of the company-specific risk be diversified away by investing in both Zeng Hsing and Grape King 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 Grape King 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 Grape King Bio, you can compare the effects of market volatilities on Zeng Hsing and Grape King 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 Grape King. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zeng Hsing and Grape King.
Diversification Opportunities for Zeng Hsing and Grape King
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zeng and Grape is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Zeng Hsing Industrial and Grape King Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grape King Bio 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 Grape King. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grape King Bio has no effect on the direction of Zeng Hsing i.e., Zeng Hsing and Grape King go up and down completely randomly.
Pair Corralation between Zeng Hsing and Grape King
Assuming the 90 days trading horizon Zeng Hsing Industrial is expected to generate 1.08 times more return on investment than Grape King. However, Zeng Hsing is 1.08 times more volatile than Grape King Bio. It trades about 0.29 of its potential returns per unit of risk. Grape King Bio is currently generating about 0.13 per unit of risk. If you would invest 10,550 in Zeng Hsing Industrial on November 28, 2024 and sell it today you would earn a total of 450.00 from holding Zeng Hsing Industrial or generate 4.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zeng Hsing Industrial vs. Grape King Bio
Performance |
| Timeline |
| Zeng Hsing Industrial |
| Grape King Bio |
Zeng Hsing and Grape King Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zeng Hsing and Grape King
The main advantage of trading using opposite Zeng Hsing and Grape King positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zeng Hsing position performs unexpectedly, Grape King 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 Grape King will offset losses from the drop in Grape King'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 |
| Grape King vs. Standard Foods Corp | Grape King vs. Eclat Textile Co | Grape King vs. Feng Tay Enterprises | Grape King vs. China Steel Chemical |
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.
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