Correlation Between Senao International and Zinwell
Can any of the company-specific risk be diversified away by investing in both Senao International and Zinwell 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 Senao International and Zinwell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Senao International Co and Zinwell, you can compare the effects of market volatilities on Senao International and Zinwell 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 Senao International with a short position of Zinwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senao International and Zinwell.
Diversification Opportunities for Senao International and Zinwell
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Senao and Zinwell is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Senao International Co and Zinwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinwell and Senao International 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 Senao International Co are associated (or correlated) with Zinwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinwell has no effect on the direction of Senao International i.e., Senao International and Zinwell go up and down completely randomly.
Pair Corralation between Senao International and Zinwell
Assuming the 90 days trading horizon Senao International Co is expected to generate 0.4 times more return on investment than Zinwell. However, Senao International Co is 2.5 times less risky than Zinwell. It trades about 0.01 of its potential returns per unit of risk. Zinwell is currently generating about -0.01 per unit of risk. If you would invest 3,215 in Senao International Co on November 2, 2024 and sell it today you would earn a total of 55.00 from holding Senao International Co or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Senao International Co vs. Zinwell
Performance |
| Timeline |
| Senao International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Zinwell |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Senao International and Zinwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Senao International and Zinwell
The main advantage of trading using opposite Senao International and Zinwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senao International position performs unexpectedly, Zinwell 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 Zinwell will offset losses from the drop in Zinwell's long position.The idea behind Senao International Co and Zinwell 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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