Correlation Between Cambricon Technologies and Zotye Automobile
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By analyzing existing cross correlation between Cambricon Technologies Corp and Zotye Automobile Co, you can compare the effects of market volatilities on Cambricon Technologies and Zotye Automobile 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 Cambricon Technologies with a short position of Zotye Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambricon Technologies and Zotye Automobile.
Diversification Opportunities for Cambricon Technologies and Zotye Automobile
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cambricon and Zotye is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cambricon Technologies Corp and Zotye Automobile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zotye Automobile and Cambricon Technologies 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 Cambricon Technologies Corp are associated (or correlated) with Zotye Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zotye Automobile has no effect on the direction of Cambricon Technologies i.e., Cambricon Technologies and Zotye Automobile go up and down completely randomly.
Pair Corralation between Cambricon Technologies and Zotye Automobile
Assuming the 90 days trading horizon Cambricon Technologies Corp is expected to generate 0.83 times more return on investment than Zotye Automobile. However, Cambricon Technologies Corp is 1.21 times less risky than Zotye Automobile. It trades about 0.26 of its potential returns per unit of risk. Zotye Automobile Co is currently generating about 0.11 per unit of risk. If you would invest 47,400 in Cambricon Technologies Corp on September 14, 2024 and sell it today you would earn a total of 10,299 from holding Cambricon Technologies Corp or generate 21.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cambricon Technologies Corp vs. Zotye Automobile Co
Performance |
| Timeline |
| Cambricon Technologies |
| Zotye Automobile |
Cambricon Technologies and Zotye Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambricon Technologies and Zotye Automobile
The main advantage of trading using opposite Cambricon Technologies and Zotye Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambricon Technologies position performs unexpectedly, Zotye Automobile 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 Zotye Automobile will offset losses from the drop in Zotye Automobile's long position.The idea behind Cambricon Technologies Corp and Zotye Automobile 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.
| Zotye Automobile vs. Cambricon Technologies Corp | Zotye Automobile vs. Loongson Technology Corp | Zotye Automobile vs. Shenzhen Fortune Trend | Zotye Automobile vs. Chongqing Road Bridge |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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