Correlation Between Zhejiang Publishing and Wenzhou Hongfeng
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By analyzing existing cross correlation between Zhejiang Publishing Media and Wenzhou Hongfeng Electrical, you can compare the effects of market volatilities on Zhejiang Publishing and Wenzhou Hongfeng 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 Zhejiang Publishing with a short position of Wenzhou Hongfeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Publishing and Wenzhou Hongfeng.
Diversification Opportunities for Zhejiang Publishing and Wenzhou Hongfeng
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zhejiang and Wenzhou is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Publishing Media and Wenzhou Hongfeng Electrical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wenzhou Hongfeng Ele and Zhejiang Publishing 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 Zhejiang Publishing Media are associated (or correlated) with Wenzhou Hongfeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wenzhou Hongfeng Ele has no effect on the direction of Zhejiang Publishing i.e., Zhejiang Publishing and Wenzhou Hongfeng go up and down completely randomly.
Pair Corralation between Zhejiang Publishing and Wenzhou Hongfeng
Assuming the 90 days trading horizon Zhejiang Publishing Media is expected to generate 0.84 times more return on investment than Wenzhou Hongfeng. However, Zhejiang Publishing Media is 1.19 times less risky than Wenzhou Hongfeng. It trades about 0.02 of its potential returns per unit of risk. Wenzhou Hongfeng Electrical is currently generating about 0.01 per unit of risk. If you would invest 702.00 in Zhejiang Publishing Media on October 26, 2024 and sell it today you would earn a total of 48.00 from holding Zhejiang Publishing Media or generate 6.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhejiang Publishing Media vs. Wenzhou Hongfeng Electrical
Performance |
| Timeline |
| Zhejiang Publishing Media |
| Wenzhou Hongfeng Ele |
Zhejiang Publishing and Wenzhou Hongfeng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhejiang Publishing and Wenzhou Hongfeng
The main advantage of trading using opposite Zhejiang Publishing and Wenzhou Hongfeng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhejiang Publishing position performs unexpectedly, Wenzhou Hongfeng 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 Wenzhou Hongfeng will offset losses from the drop in Wenzhou Hongfeng's long position.The idea behind Zhejiang Publishing Media and Wenzhou Hongfeng Electrical 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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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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