Correlation Between ZYF Lopsking and Shenzhen New

Can any of the company-specific risk be diversified away by investing in both ZYF Lopsking and Shenzhen New 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 ZYF Lopsking and Shenzhen New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ZYF Lopsking Aluminum and Shenzhen New Nanshan, you can compare the effects of market volatilities on ZYF Lopsking and Shenzhen New 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 ZYF Lopsking with a short position of Shenzhen New. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZYF Lopsking and Shenzhen New.

Diversification Opportunities for ZYF Lopsking and Shenzhen New

0.95

Correlation Coefficient

ZYF Lopsking  Shenzhen New

Almost no diversification

The 3 months correlation between ZYF and Shenzhen is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ZYF Lopsking Aluminum and Shenzhen New Nanshan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen New Nanshan and ZYF Lopsking 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 ZYF Lopsking Aluminum are associated (or correlated) with Shenzhen New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen New Nanshan has no effect on the direction of ZYF Lopsking i.e., ZYF Lopsking and Shenzhen New go up and down completely randomly.

Pair Corralation between ZYF Lopsking and Shenzhen New

Assuming the 90 days trading horizon ZYF Lopsking is expected to generate 1.93 times less return on investment than Shenzhen New. But when comparing it to its historical volatility, ZYF Lopsking Aluminum is 1.33 times less risky than Shenzhen New. It trades about 0.14 of its potential returns per unit of risk. Shenzhen New Nanshan is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  193.00  in Shenzhen New Nanshan on September 12, 2024 and sell it today you would earn a total of  86.00  from holding Shenzhen New Nanshan or generate 44.56% return on investment over 90 days.

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

ZYF Lopsking Aluminum  vs.  Shenzhen New Nanshan

ZYF Lopsking Aluminum

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ZYF Lopsking Aluminum are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ZYF Lopsking sustained solid returns over the last few months and may actually be approaching a breakup point.

Shenzhen New Nanshan

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen New Nanshan are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen New sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZYF Lopsking and Shenzhen New

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

The idea behind ZYF Lopsking Aluminum and Shenzhen New Nanshan 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.