Correlation Between Zhongsheng Group and Lamar Advertising
Can any of the company-specific risk be diversified away by investing in both Zhongsheng Group and Lamar Advertising 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 Zhongsheng Group and Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zhongsheng Group Holdings and Lamar Advertising, you can compare the effects of market volatilities on Zhongsheng Group and Lamar Advertising 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 Zhongsheng Group with a short position of Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongsheng Group and Lamar Advertising.
Diversification Opportunities for Zhongsheng Group and Lamar Advertising
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zhongsheng and Lamar is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Zhongsheng Group Holdings and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising and Zhongsheng Group 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 Zhongsheng Group Holdings are associated (or correlated) with Lamar Advertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lamar Advertising has no effect on the direction of Zhongsheng Group i.e., Zhongsheng Group and Lamar Advertising go up and down completely randomly.
Pair Corralation between Zhongsheng Group and Lamar Advertising
Assuming the 90 days horizon Zhongsheng Group Holdings is expected to under-perform the Lamar Advertising. In addition to that, Zhongsheng Group is 3.74 times more volatile than Lamar Advertising. It trades about -0.15 of its total potential returns per unit of risk. Lamar Advertising is currently generating about 0.04 per unit of volatility. If you would invest 12,100 in Lamar Advertising on September 12, 2024 and sell it today you would earn a total of 100.00 from holding Lamar Advertising or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhongsheng Group Holdings vs. Lamar Advertising
Performance |
| Timeline |
| Zhongsheng Group Holdings |
| Lamar Advertising |
Zhongsheng Group and Lamar Advertising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhongsheng Group and Lamar Advertising
The main advantage of trading using opposite Zhongsheng Group and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhongsheng Group position performs unexpectedly, Lamar Advertising 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 Lamar Advertising will offset losses from the drop in Lamar Advertising's long position.| Zhongsheng Group vs. Penta Ocean Construction Co | Zhongsheng Group vs. North American Construction | Zhongsheng Group vs. TITAN MACHINERY | Zhongsheng Group vs. Perseus Mining Limited |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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