Correlation Between Yantai Jereh and Zhejiang Kingland

Can any of the company-specific risk be diversified away by investing in both Yantai Jereh and Zhejiang Kingland 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 Yantai Jereh and Zhejiang Kingland into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yantai Jereh Oilfield and Zhejiang Kingland Pipeline, you can compare the effects of market volatilities on Yantai Jereh and Zhejiang Kingland 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 Yantai Jereh with a short position of Zhejiang Kingland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yantai Jereh and Zhejiang Kingland.

Diversification Opportunities for Yantai Jereh and Zhejiang Kingland

0.53

Correlation Coefficient

Yantai Jereh  Zhejiang Kingland

Very weak diversification

The 3 months correlation between Yantai and Zhejiang is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Yantai Jereh Oilfield and Zhejiang Kingland Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Kingland and Yantai Jereh 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 Yantai Jereh Oilfield are associated (or correlated) with Zhejiang Kingland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Kingland has no effect on the direction of Yantai Jereh i.e., Yantai Jereh and Zhejiang Kingland go up and down completely randomly.

Pair Corralation between Yantai Jereh and Zhejiang Kingland

Assuming the 90 days trading horizon Yantai Jereh Oilfield is expected to generate 1.15 times more return on investment than Zhejiang Kingland. However, Yantai Jereh is 1.15 times more volatile than Zhejiang Kingland Pipeline. It trades about 0.04 of its potential returns per unit of risk. Zhejiang Kingland Pipeline is currently generating about 0.01 per unit of risk. If you would invest  2,763  in Yantai Jereh Oilfield on September 30, 2024 and sell it today you would earn a total of  827.00  from holding Yantai Jereh Oilfield or generate 29.93% return on investment over 90 days.

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

Yantai Jereh Oilfield  vs.  Zhejiang Kingland Pipeline

Yantai Jereh Oilfield

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yantai Jereh Oilfield are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yantai Jereh may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Zhejiang Kingland

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Yantai Jereh and Zhejiang Kingland

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

The idea behind Yantai Jereh Oilfield and Zhejiang Kingland Pipeline 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.