Correlation Between Zhen Ding and Jetway Information
Can any of the company-specific risk be diversified away by investing in both Zhen Ding and Jetway Information 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 Zhen Ding and Jetway Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zhen Ding Technology and Jetway Information Co, you can compare the effects of market volatilities on Zhen Ding and Jetway Information 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 Zhen Ding with a short position of Jetway Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhen Ding and Jetway Information.
Diversification Opportunities for Zhen Ding and Jetway Information
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zhen and Jetway is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Zhen Ding Technology and Jetway Information Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jetway Information and Zhen Ding 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 Zhen Ding Technology are associated (or correlated) with Jetway Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jetway Information has no effect on the direction of Zhen Ding i.e., Zhen Ding and Jetway Information go up and down completely randomly.
Pair Corralation between Zhen Ding and Jetway Information
Assuming the 90 days trading horizon Zhen Ding is expected to generate 88.18 times less return on investment than Jetway Information. But when comparing it to its historical volatility, Zhen Ding Technology is 41.52 times less risky than Jetway Information. It trades about 0.04 of its potential returns per unit of risk. Jetway Information Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,088 in Jetway Information Co on November 5, 2024 and sell it today you would lose (858.00) from holding Jetway Information Co or give up 16.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhen Ding Technology vs. Jetway Information Co
Performance |
| Timeline |
| Zhen Ding Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Jetway Information |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Zhen Ding and Jetway Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhen Ding and Jetway Information
The main advantage of trading using opposite Zhen Ding and Jetway Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhen Ding position performs unexpectedly, Jetway Information 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 Jetway Information will offset losses from the drop in Jetway Information's long position.The idea behind Zhen Ding Technology and Jetway Information Co 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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