Correlation Between Voltronic Power and ZongTai Real
Can any of the company-specific risk be diversified away by investing in both Voltronic Power and ZongTai Real 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 Voltronic Power and ZongTai Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voltronic Power Technology and ZongTai Real Estate, you can compare the effects of market volatilities on Voltronic Power and ZongTai Real 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 Voltronic Power with a short position of ZongTai Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voltronic Power and ZongTai Real.
Diversification Opportunities for Voltronic Power and ZongTai Real
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Voltronic and ZongTai is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Voltronic Power Technology and ZongTai Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZongTai Real Estate and Voltronic Power 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 Voltronic Power Technology are associated (or correlated) with ZongTai Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZongTai Real Estate has no effect on the direction of Voltronic Power i.e., Voltronic Power and ZongTai Real go up and down completely randomly.
Pair Corralation between Voltronic Power and ZongTai Real
Assuming the 90 days trading horizon Voltronic Power is expected to generate 1.05 times less return on investment than ZongTai Real. In addition to that, Voltronic Power is 1.46 times more volatile than ZongTai Real Estate. It trades about 0.02 of its total potential returns per unit of risk. ZongTai Real Estate is currently generating about 0.04 per unit of volatility. If you would invest 2,855 in ZongTai Real Estate on November 9, 2024 and sell it today you would earn a total of 430.00 from holding ZongTai Real Estate or generate 15.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voltronic Power Technology vs. ZongTai Real Estate
Performance |
| Timeline |
| Voltronic Power Tech |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| ZongTai Real Estate |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Voltronic Power and ZongTai Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voltronic Power and ZongTai Real
The main advantage of trading using opposite Voltronic Power and ZongTai Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voltronic Power position performs unexpectedly, ZongTai Real 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 ZongTai Real will offset losses from the drop in ZongTai Real's long position.The idea behind Voltronic Power Technology and ZongTai Real Estate 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.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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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