Correlation Between Zhengzhou Qianweiyangchu and ROPEOK Technology

Can any of the company-specific risk be diversified away by investing in both Zhengzhou Qianweiyangchu and ROPEOK Technology 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 Zhengzhou Qianweiyangchu and ROPEOK Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zhengzhou Qianweiyangchu Food and ROPEOK Technology Group, you can compare the effects of market volatilities on Zhengzhou Qianweiyangchu and ROPEOK Technology 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 Zhengzhou Qianweiyangchu with a short position of ROPEOK Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhengzhou Qianweiyangchu and ROPEOK Technology.

Diversification Opportunities for Zhengzhou Qianweiyangchu and ROPEOK Technology

0.89

Correlation Coefficient

Zhengzhou Qianweiyangchu  ROPEOK Technology

Very poor diversification

The 3 months correlation between Zhengzhou and ROPEOK is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Zhengzhou Qianweiyangchu Food and ROPEOK Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROPEOK Technology and Zhengzhou Qianweiyangchu 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 Zhengzhou Qianweiyangchu Food are associated (or correlated) with ROPEOK Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROPEOK Technology has no effect on the direction of Zhengzhou Qianweiyangchu i.e., Zhengzhou Qianweiyangchu and ROPEOK Technology go up and down completely randomly.

Pair Corralation between Zhengzhou Qianweiyangchu and ROPEOK Technology

Assuming the 90 days trading horizon Zhengzhou Qianweiyangchu is expected to generate 9.51 times less return on investment than ROPEOK Technology. But when comparing it to its historical volatility, Zhengzhou Qianweiyangchu Food is 1.07 times less risky than ROPEOK Technology. It trades about 0.01 of its potential returns per unit of risk. ROPEOK Technology Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  800.00  in ROPEOK Technology Group on September 30, 2024 and sell it today you would earn a total of  136.00  from holding ROPEOK Technology Group or generate 17.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Zhengzhou Qianweiyangchu Food  vs.  ROPEOK Technology Group

Zhengzhou Qianweiyangchu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhengzhou Qianweiyangchu Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Zhengzhou Qianweiyangchu is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ROPEOK Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ROPEOK Technology Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ROPEOK Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhengzhou Qianweiyangchu and ROPEOK Technology

The main advantage of trading using opposite Zhengzhou Qianweiyangchu and ROPEOK Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhengzhou Qianweiyangchu position performs unexpectedly, ROPEOK Technology 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 ROPEOK Technology will offset losses from the drop in ROPEOK Technology's long position.

The idea behind Zhengzhou Qianweiyangchu Food and ROPEOK Technology Group 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.

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.