Correlation Between Zhongsheng Group and Cars
Can any of the company-specific risk be diversified away by investing in both Zhongsheng Group and Cars 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 Cars 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 Cars Inc, you can compare the effects of market volatilities on Zhongsheng Group and Cars 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 Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongsheng Group and Cars.
Diversification Opportunities for Zhongsheng Group and Cars
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zhongsheng and Cars is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Zhongsheng Group Holdings and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc 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 Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Zhongsheng Group i.e., Zhongsheng Group and Cars go up and down completely randomly.
Pair Corralation between Zhongsheng Group and Cars
Assuming the 90 days horizon Zhongsheng Group Holdings is expected to generate 1.59 times more return on investment than Cars. However, Zhongsheng Group is 1.59 times more volatile than Cars Inc. It trades about -0.14 of its potential returns per unit of risk. Cars Inc is currently generating about -0.25 per unit of risk. If you would invest 200.00 in Zhongsheng Group Holdings on September 24, 2024 and sell it today you would lose (18.00) from holding Zhongsheng Group Holdings or give up 9.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhongsheng Group Holdings vs. Cars Inc
Performance |
| Timeline |
| Zhongsheng Group Holdings |
| Cars Inc |
Zhongsheng Group and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhongsheng Group and Cars
The main advantage of trading using opposite Zhongsheng Group and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhongsheng Group position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| Zhongsheng Group vs. Copart Inc | Zhongsheng Group vs. CarMax Inc | Zhongsheng Group vs. DIeteren Group SA | Zhongsheng Group vs. Penske Automotive Group |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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