Correlation Between Dixie and ZKH Group
Can any of the company-specific risk be diversified away by investing in both Dixie and ZKH Group 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 Dixie and ZKH Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Dixie Group and ZKH Group Limited, you can compare the effects of market volatilities on Dixie and ZKH Group 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 Dixie with a short position of ZKH Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dixie and ZKH Group.
Diversification Opportunities for Dixie and ZKH Group
Very weak diversification
The 3 months correlation between Dixie and ZKH is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding The Dixie Group and ZKH Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKH Group Limited and Dixie 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 The Dixie Group are associated (or correlated) with ZKH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKH Group Limited has no effect on the direction of Dixie i.e., Dixie and ZKH Group go up and down completely randomly.
Pair Corralation between Dixie and ZKH Group
Given the investment horizon of 90 days The Dixie Group is expected to generate 0.99 times more return on investment than ZKH Group. However, The Dixie Group is 1.01 times less risky than ZKH Group. It trades about 0.02 of its potential returns per unit of risk. ZKH Group Limited is currently generating about -0.06 per unit of risk. If you would invest 112.00 in The Dixie Group on August 27, 2024 and sell it today you would lose (33.00) from holding The Dixie Group or give up 29.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 51.74% |
| Values | Daily Returns |
The Dixie Group vs. ZKH Group Limited
Performance |
| Timeline |
| Dixie Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| ZKH Group Limited |
Dixie and ZKH Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dixie and ZKH Group
The main advantage of trading using opposite Dixie and ZKH Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dixie position performs unexpectedly, ZKH Group 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 ZKH Group will offset losses from the drop in ZKH Group's long position.The idea behind The Dixie Group and ZKH Group Limited 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.| ZKH Group vs. Tyson Foods | ZKH Group vs. EMCOR Group | ZKH Group vs. Arm Holdings plc | ZKH Group vs. Taiwan Semiconductor Manufacturing |
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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