Correlation Between Zhongzhu Medical and China Vanke

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Can any of the company-specific risk be diversified away by investing in both Zhongzhu Medical and China Vanke 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 Zhongzhu Medical and China Vanke into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zhongzhu Medical Holdings and China Vanke Co, you can compare the effects of market volatilities on Zhongzhu Medical and China Vanke 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 Zhongzhu Medical with a short position of China Vanke. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongzhu Medical and China Vanke.

Diversification Opportunities for Zhongzhu Medical and China Vanke

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Zhongzhu and China is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Zhongzhu Medical Holdings and China Vanke Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Vanke and Zhongzhu Medical 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 Zhongzhu Medical Holdings are associated (or correlated) with China Vanke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Vanke has no effect on the direction of Zhongzhu Medical i.e., Zhongzhu Medical and China Vanke go up and down completely randomly.

Pair Corralation between Zhongzhu Medical and China Vanke

Assuming the 90 days trading horizon Zhongzhu Medical Holdings is expected to generate 1.59 times more return on investment than China Vanke. However, Zhongzhu Medical is 1.59 times more volatile than China Vanke Co. It trades about -0.38 of its potential returns per unit of risk. China Vanke Co is currently generating about -0.71 per unit of risk. If you would invest  151.00  in Zhongzhu Medical Holdings on October 16, 2024 and sell it today you would lose (24.00) from holding Zhongzhu Medical Holdings or give up 15.89% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Zhongzhu Medical Holdings  vs.  China Vanke Co

 Performance 
       Timeline  
Zhongzhu Medical Holdings 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Zhongzhu Medical Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zhongzhu Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
China Vanke 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days China Vanke Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Zhongzhu Medical and China Vanke Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zhongzhu Medical and China Vanke

The main advantage of trading using opposite Zhongzhu Medical and China Vanke positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhongzhu Medical position performs unexpectedly, China Vanke 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 China Vanke will offset losses from the drop in China Vanke's long position.
The idea behind Zhongzhu Medical Holdings and China Vanke 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.
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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