Correlation Between INVITATION HOMES and Zhongsheng Group
Can any of the company-specific risk be diversified away by investing in both INVITATION HOMES and Zhongsheng Group 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 INVITATION HOMES and Zhongsheng Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INVITATION HOMES DL and Zhongsheng Group Holdings, you can compare the effects of market volatilities on INVITATION HOMES and Zhongsheng Group 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 INVITATION HOMES with a short position of Zhongsheng Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of INVITATION HOMES and Zhongsheng Group.
Diversification Opportunities for INVITATION HOMES and Zhongsheng Group
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between INVITATION and Zhongsheng is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding INVITATION HOMES DL and Zhongsheng Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongsheng Group Holdings and INVITATION HOMES 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 INVITATION HOMES DL are associated (or correlated) with Zhongsheng Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongsheng Group Holdings has no effect on the direction of INVITATION HOMES i.e., INVITATION HOMES and Zhongsheng Group go up and down completely randomly.
Pair Corralation between INVITATION HOMES and Zhongsheng Group
Assuming the 90 days horizon INVITATION HOMES is expected to generate 12.76 times less return on investment than Zhongsheng Group. But when comparing it to its historical volatility, INVITATION HOMES DL is 5.91 times less risky than Zhongsheng Group. It trades about 0.03 of its potential returns per unit of risk. Zhongsheng Group Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 104.00 in Zhongsheng Group Holdings on September 14, 2024 and sell it today you would earn a total of 96.00 from holding Zhongsheng Group Holdings or generate 92.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INVITATION HOMES DL vs. Zhongsheng Group Holdings
Performance |
| Timeline |
| INVITATION HOMES |
| Zhongsheng Group Holdings |
INVITATION HOMES and Zhongsheng Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INVITATION HOMES and Zhongsheng Group
The main advantage of trading using opposite INVITATION HOMES and Zhongsheng Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INVITATION HOMES position performs unexpectedly, Zhongsheng Group 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 Zhongsheng Group will offset losses from the drop in Zhongsheng Group's long position.| INVITATION HOMES vs. American Homes 4 | INVITATION HOMES vs. Superior Plus Corp | INVITATION HOMES vs. SIVERS SEMICONDUCTORS AB | INVITATION HOMES vs. NorAm Drilling AS |
| Zhongsheng Group vs. Hitachi Construction Machinery | Zhongsheng Group vs. Tri Pointe Homes | Zhongsheng Group vs. DFS Furniture PLC | Zhongsheng Group vs. INVITATION HOMES DL |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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