Correlation Between Zhejiang Expressway and Shenzhen International
Can any of the company-specific risk be diversified away by investing in both Zhejiang Expressway and Shenzhen International 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 Zhejiang Expressway and Shenzhen International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zhejiang Expressway Co and Shenzhen International Holdings, you can compare the effects of market volatilities on Zhejiang Expressway and Shenzhen International 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 Zhejiang Expressway with a short position of Shenzhen International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Expressway and Shenzhen International.
Diversification Opportunities for Zhejiang Expressway and Shenzhen International
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Zhejiang and Shenzhen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Expressway Co and Shenzhen International Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen International and Zhejiang Expressway 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 Zhejiang Expressway Co are associated (or correlated) with Shenzhen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen International has no effect on the direction of Zhejiang Expressway i.e., Zhejiang Expressway and Shenzhen International go up and down completely randomly.
Pair Corralation between Zhejiang Expressway and Shenzhen International
Assuming the 90 days horizon Zhejiang Expressway is expected to generate 19.67 times less return on investment than Shenzhen International. But when comparing it to its historical volatility, Zhejiang Expressway Co is 4.27 times less risky than Shenzhen International. It trades about 0.02 of its potential returns per unit of risk. Shenzhen International Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 45.00 in Shenzhen International Holdings on August 29, 2024 and sell it today you would earn a total of 43.00 from holding Shenzhen International Holdings or generate 95.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 37.93% |
| Values | Daily Returns |
Zhejiang Expressway Co vs. Shenzhen International Holding
Performance |
| Timeline |
| Zhejiang Expressway |
| Shenzhen International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Zhejiang Expressway and Shenzhen International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhejiang Expressway and Shenzhen International
The main advantage of trading using opposite Zhejiang Expressway and Shenzhen International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhejiang Expressway position performs unexpectedly, Shenzhen International 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 Shenzhen International will offset losses from the drop in Shenzhen International's long position.| Zhejiang Expressway vs. Verra Mobility Corp | Zhejiang Expressway vs. HUMANA INC | Zhejiang Expressway vs. Aquagold International | Zhejiang Expressway vs. Barloworld Ltd ADR |
| Shenzhen International vs. Zhejiang Expressway Co | Shenzhen International vs. Jiangsu Expressway Co | Shenzhen International vs. Jiangsu Expressway | Shenzhen International vs. Verra Mobility Corp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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