Correlation Between ZTE and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both ZTE and Martin Marietta 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 ZTE and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZTE Corporation and Martin Marietta Materials, you can compare the effects of market volatilities on ZTE and Martin Marietta 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 ZTE with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZTE and Martin Marietta.
Diversification Opportunities for ZTE and Martin Marietta
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between ZTE and Martin is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding ZTE Corp. and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials and ZTE 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 ZTE Corporation are associated (or correlated) with Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Materials has no effect on the direction of ZTE i.e., ZTE and Martin Marietta go up and down completely randomly.
Pair Corralation between ZTE and Martin Marietta
Assuming the 90 days horizon ZTE Corporation is expected to generate 2.82 times more return on investment than Martin Marietta. However, ZTE is 2.82 times more volatile than Martin Marietta Materials. It trades about 0.06 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.06 per unit of risk. If you would invest 156.00 in ZTE Corporation on December 1, 2024 and sell it today you would earn a total of 230.00 from holding ZTE Corporation or generate 147.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZTE Corp. vs. Martin Marietta Materials
Performance |
| Timeline |
| ZTE Corporation |
| Martin Marietta Materials |
ZTE and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZTE and Martin Marietta
The main advantage of trading using opposite ZTE and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZTE position performs unexpectedly, Martin Marietta 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 Martin Marietta will offset losses from the drop in Martin Marietta's long position.The idea behind ZTE Corporation and Martin Marietta Materials 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.| Martin Marietta vs. INVITATION HOMES DL | Martin Marietta vs. Hyatt Hotels | Martin Marietta vs. Autohome | Martin Marietta vs. ANGI Homeservices |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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