Correlation Between Zhejiang Kingland and Jiangsu Xinri

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

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

Diversification Opportunities for Zhejiang Kingland and Jiangsu Xinri

0.82

Correlation Coefficient

Zhejiang Kingland  Jiangsu Xinri

Very poor diversification

The 3 months correlation between Zhejiang and Jiangsu is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Kingland Pipeline and Jiangsu Xinri E Vehicle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Xinri E and Zhejiang Kingland 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 Kingland Pipeline are associated (or correlated) with Jiangsu Xinri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Xinri E has no effect on the direction of Zhejiang Kingland i.e., Zhejiang Kingland and Jiangsu Xinri go up and down completely randomly.

Pair Corralation between Zhejiang Kingland and Jiangsu Xinri

Assuming the 90 days trading horizon Zhejiang Kingland Pipeline is expected to generate 0.98 times more return on investment than Jiangsu Xinri. However, Zhejiang Kingland Pipeline is 1.02 times less risky than Jiangsu Xinri. It trades about 0.14 of its potential returns per unit of risk. Jiangsu Xinri E Vehicle is currently generating about 0.09 per unit of risk. If you would invest  521.00  in Zhejiang Kingland Pipeline on September 6, 2024 and sell it today you would earn a total of  111.00  from holding Zhejiang Kingland Pipeline or generate 21.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.28%
Values	Daily Returns

Zhejiang Kingland Pipeline  vs.  Jiangsu Xinri E Vehicle

Zhejiang Kingland

Risk-Adjusted Performance

11 of 100

Good

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

Jiangsu Xinri E

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Xinri E Vehicle are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Xinri sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhejiang Kingland and Jiangsu Xinri

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

The idea behind Zhejiang Kingland Pipeline and Jiangsu Xinri E Vehicle 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.