Correlation Between Zhen Ding and ADLINK Technology
Can any of the company-specific risk be diversified away by investing in both Zhen Ding and ADLINK Technology 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 ADLINK Technology 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 ADLINK Technology, you can compare the effects of market volatilities on Zhen Ding and ADLINK Technology 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 ADLINK Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhen Ding and ADLINK Technology.
Diversification Opportunities for Zhen Ding and ADLINK Technology
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zhen and ADLINK is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Zhen Ding Technology and ADLINK Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADLINK Technology 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 ADLINK Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADLINK Technology has no effect on the direction of Zhen Ding i.e., Zhen Ding and ADLINK Technology go up and down completely randomly.
Pair Corralation between Zhen Ding and ADLINK Technology
Assuming the 90 days trading horizon Zhen Ding Technology is expected to under-perform the ADLINK Technology. But the stock apears to be less risky and, when comparing its historical volatility, Zhen Ding Technology is 1.02 times less risky than ADLINK Technology. The stock trades about 0.0 of its potential returns per unit of risk. The ADLINK Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,480 in ADLINK Technology on November 4, 2024 and sell it today you would earn a total of 1,060 from holding ADLINK Technology or generate 16.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhen Ding Technology vs. ADLINK Technology
Performance |
| Timeline |
| Zhen Ding Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| ADLINK Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Zhen Ding and ADLINK Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhen Ding and ADLINK Technology
The main advantage of trading using opposite Zhen Ding and ADLINK Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhen Ding position performs unexpectedly, ADLINK Technology 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 ADLINK Technology will offset losses from the drop in ADLINK Technology's long position.The idea behind Zhen Ding Technology and ADLINK 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.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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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