Correlation Between Zhong Yang and Aurora Innovation
Can any of the company-specific risk be diversified away by investing in both Zhong Yang and Aurora Innovation 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 Zhong Yang and Aurora Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zhong Yang Financial and Aurora Innovation, you can compare the effects of market volatilities on Zhong Yang and Aurora Innovation 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 Zhong Yang with a short position of Aurora Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhong Yang and Aurora Innovation.
Diversification Opportunities for Zhong Yang and Aurora Innovation
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zhong and Aurora is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Zhong Yang Financial and Aurora Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Innovation and Zhong Yang 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 Zhong Yang Financial are associated (or correlated) with Aurora Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Innovation has no effect on the direction of Zhong Yang i.e., Zhong Yang and Aurora Innovation go up and down completely randomly.
Pair Corralation between Zhong Yang and Aurora Innovation
Considering the 90-day investment horizon Zhong Yang Financial is expected to under-perform the Aurora Innovation. But the stock apears to be less risky and, when comparing its historical volatility, Zhong Yang Financial is 3.09 times less risky than Aurora Innovation. The stock trades about -0.16 of its potential returns per unit of risk. The Aurora Innovation is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 685.00 in Aurora Innovation on August 28, 2024 and sell it today you would lose (40.00) from holding Aurora Innovation or give up 5.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Zhong Yang Financial vs. Aurora Innovation
Performance |
| Timeline |
| Zhong Yang Financial |
| Aurora Innovation |
Zhong Yang and Aurora Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhong Yang and Aurora Innovation
The main advantage of trading using opposite Zhong Yang and Aurora Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhong Yang position performs unexpectedly, Aurora Innovation 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 Aurora Innovation will offset losses from the drop in Aurora Innovation's long position.| Zhong Yang vs. Netcapital | Zhong Yang vs. Applied Blockchain | Zhong Yang vs. Magic Empire Global | Zhong Yang vs. Lazard |
| Aurora Innovation vs. Magic Empire Global | Aurora Innovation vs. Zhong Yang Financial | Aurora Innovation vs. Netcapital | Aurora Innovation vs. Lazard |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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