Correlation Between Anji Foodstuff and Zotye Automobile

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Can any of the company-specific risk be diversified away by investing in both Anji Foodstuff and Zotye Automobile 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 Anji Foodstuff and Zotye Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anji Foodstuff Co and Zotye Automobile Co, you can compare the effects of market volatilities on Anji Foodstuff and Zotye Automobile 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 Anji Foodstuff with a short position of Zotye Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anji Foodstuff and Zotye Automobile.

Diversification Opportunities for Anji Foodstuff and Zotye Automobile

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Anji and Zotye is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Anji Foodstuff Co and Zotye Automobile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zotye Automobile and Anji Foodstuff 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 Anji Foodstuff Co are associated (or correlated) with Zotye Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zotye Automobile has no effect on the direction of Anji Foodstuff i.e., Anji Foodstuff and Zotye Automobile go up and down completely randomly.

Pair Corralation between Anji Foodstuff and Zotye Automobile

Assuming the 90 days trading horizon Anji Foodstuff Co is expected to generate 0.69 times more return on investment than Zotye Automobile. However, Anji Foodstuff Co is 1.45 times less risky than Zotye Automobile. It trades about 0.0 of its potential returns per unit of risk. Zotye Automobile Co is currently generating about -0.01 per unit of risk. If you would invest  1,063  in Anji Foodstuff Co on September 28, 2024 and sell it today you would lose (207.00) from holding Anji Foodstuff Co or give up 19.47% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.79%
ValuesDaily Returns

Anji Foodstuff Co  vs.  Zotye Automobile Co

 Performance 
       Timeline  
Anji Foodstuff 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Anji Foodstuff Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anji Foodstuff may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Zotye Automobile 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Zotye Automobile Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zotye Automobile sustained solid returns over the last few months and may actually be approaching a breakup point.

Anji Foodstuff and Zotye Automobile Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Anji Foodstuff and Zotye Automobile

The main advantage of trading using opposite Anji Foodstuff and Zotye Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anji Foodstuff position performs unexpectedly, Zotye Automobile 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 Zotye Automobile will offset losses from the drop in Zotye Automobile's long position.
The idea behind Anji Foodstuff Co and Zotye Automobile Co 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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