Correlation Between Wintao Communications and Jiangsu Zhongtian

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Can any of the company-specific risk be diversified away by investing in both Wintao Communications and Jiangsu Zhongtian 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 Wintao Communications and Jiangsu Zhongtian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wintao Communications Co and Jiangsu Zhongtian Technology, you can compare the effects of market volatilities on Wintao Communications and Jiangsu Zhongtian 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 Wintao Communications with a short position of Jiangsu Zhongtian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wintao Communications and Jiangsu Zhongtian.

Diversification Opportunities for Wintao Communications and Jiangsu Zhongtian

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Wintao and Jiangsu is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Wintao Communications Co and Jiangsu Zhongtian Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Zhongtian and Wintao Communications 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 Wintao Communications Co are associated (or correlated) with Jiangsu Zhongtian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Zhongtian has no effect on the direction of Wintao Communications i.e., Wintao Communications and Jiangsu Zhongtian go up and down completely randomly.

Pair Corralation between Wintao Communications and Jiangsu Zhongtian

Assuming the 90 days trading horizon Wintao Communications Co is expected to generate 1.62 times more return on investment than Jiangsu Zhongtian. However, Wintao Communications is 1.62 times more volatile than Jiangsu Zhongtian Technology. It trades about -0.02 of its potential returns per unit of risk. Jiangsu Zhongtian Technology is currently generating about -0.13 per unit of risk. If you would invest  2,310  in Wintao Communications Co on October 28, 2024 and sell it today you would lose (47.00) from holding Wintao Communications Co or give up 2.03% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Wintao Communications Co  vs.  Jiangsu Zhongtian Technology

 Performance 
       Timeline  
Wintao Communications 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Wintao Communications Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Wintao Communications is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Jiangsu Zhongtian 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Jiangsu Zhongtian Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Wintao Communications and Jiangsu Zhongtian Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wintao Communications and Jiangsu Zhongtian

The main advantage of trading using opposite Wintao Communications and Jiangsu Zhongtian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wintao Communications position performs unexpectedly, Jiangsu Zhongtian 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 Jiangsu Zhongtian will offset losses from the drop in Jiangsu Zhongtian's long position.
The idea behind Wintao Communications Co and Jiangsu Zhongtian Technology 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.
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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