Correlation Between Barloworld and Zhejiang Expressway
Can any of the company-specific risk be diversified away by investing in both Barloworld and Zhejiang Expressway 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 Barloworld and Zhejiang Expressway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barloworld Ltd ADR and Zhejiang Expressway Co, you can compare the effects of market volatilities on Barloworld and Zhejiang Expressway 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 Barloworld with a short position of Zhejiang Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Zhejiang Expressway.
Diversification Opportunities for Barloworld and Zhejiang Expressway
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Zhejiang is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Zhejiang Expressway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Expressway and Barloworld 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 Barloworld Ltd ADR are associated (or correlated) with Zhejiang Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Expressway has no effect on the direction of Barloworld i.e., Barloworld and Zhejiang Expressway go up and down completely randomly.
Pair Corralation between Barloworld and Zhejiang Expressway
Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the Zhejiang Expressway. In addition to that, Barloworld is 1.28 times more volatile than Zhejiang Expressway Co. It trades about -0.01 of its total potential returns per unit of risk. Zhejiang Expressway Co is currently generating about 0.02 per unit of volatility. If you would invest 63.00 in Zhejiang Expressway Co on September 1, 2024 and sell it today you would earn a total of 2.00 from holding Zhejiang Expressway Co or generate 3.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Zhejiang Expressway Co
Performance |
| Timeline |
| Barloworld ADR |
| Zhejiang Expressway |
Barloworld and Zhejiang Expressway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Zhejiang Expressway
The main advantage of trading using opposite Barloworld and Zhejiang Expressway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Zhejiang Expressway 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 Zhejiang Expressway will offset losses from the drop in Zhejiang Expressway's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Zhejiang Expressway vs. Verra Mobility Corp | Zhejiang Expressway vs. HUMANA INC | Zhejiang Expressway vs. SCOR PK | Zhejiang Expressway vs. Aquagold International |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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