Correlation Between Yankershop Food and Zhuzhou Kibing

Can any of the company-specific risk be diversified away by investing in both Yankershop Food and Zhuzhou Kibing 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 Yankershop Food and Zhuzhou Kibing into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Yankershop Food and Zhuzhou Kibing

0.81

Correlation Coefficient

Yankershop Food  Zhuzhou Kibing

Very poor diversification

The 3 months correlation between Yankershop and Zhuzhou is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Yankershop Food Co and Zhuzhou Kibing Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhuzhou Kibing Group and Yankershop Food 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 Yankershop Food Co are associated (or correlated) with Zhuzhou Kibing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhuzhou Kibing Group has no effect on the direction of Yankershop Food i.e., Yankershop Food and Zhuzhou Kibing go up and down completely randomly.

Pair Corralation between Yankershop Food and Zhuzhou Kibing

Assuming the 90 days trading horizon Yankershop Food Co is expected to generate 0.94 times more return on investment than Zhuzhou Kibing. However, Yankershop Food Co is 1.06 times less risky than Zhuzhou Kibing. It trades about 0.19 of its potential returns per unit of risk. Zhuzhou Kibing Group is currently generating about 0.13 per unit of risk. If you would invest  4,246  in Yankershop Food Co on September 23, 2024 and sell it today you would earn a total of  1,736  from holding Yankershop Food Co or generate 40.89% return on investment over 90 days.

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

Yankershop Food Co  vs.  Zhuzhou Kibing Group

Yankershop Food

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yankershop Food Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yankershop Food sustained solid returns over the last few months and may actually be approaching a breakup point.

Zhuzhou Kibing Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zhuzhou Kibing Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhuzhou Kibing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yankershop Food and Zhuzhou Kibing

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

The idea behind Yankershop Food Co and Zhuzhou Kibing 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.

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.