Correlation Between Anji Foodstuff and Zhongzhu Medical

Can any of the company-specific risk be diversified away by investing in both Anji Foodstuff and Zhongzhu Medical 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 Zhongzhu Medical 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 Zhongzhu Medical Holdings, you can compare the effects of market volatilities on Anji Foodstuff and Zhongzhu Medical 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 Zhongzhu Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anji Foodstuff and Zhongzhu Medical.

Diversification Opportunities for Anji Foodstuff and Zhongzhu Medical

0.78

Correlation Coefficient

Anji Foodstuff  Zhongzhu Medical

Poor diversification

The 3 months correlation between Anji and Zhongzhu is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Anji Foodstuff Co and Zhongzhu Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongzhu Medical Holdings 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 Zhongzhu Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongzhu Medical Holdings has no effect on the direction of Anji Foodstuff i.e., Anji Foodstuff and Zhongzhu Medical go up and down completely randomly.

Pair Corralation between Anji Foodstuff and Zhongzhu Medical

Assuming the 90 days trading horizon Anji Foodstuff Co is expected to generate 1.33 times more return on investment than Zhongzhu Medical. However, Anji Foodstuff is 1.33 times more volatile than Zhongzhu Medical Holdings. It trades about 0.06 of its potential returns per unit of risk. Zhongzhu Medical Holdings is currently generating about 0.02 per unit of risk. If you would invest  800.00  in Anji Foodstuff Co on September 30, 2024 and sell it today you would earn a total of  68.00  from holding Anji Foodstuff Co or generate 8.5% return on investment over 90 days.

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

Anji Foodstuff Co  vs.  Zhongzhu Medical Holdings

Anji Foodstuff

Risk-Adjusted Performance

4 of 100

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.

Zhongzhu Medical Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongzhu Medical Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zhongzhu Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Anji Foodstuff and Zhongzhu Medical

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

The idea behind Anji Foodstuff Co and Zhongzhu Medical Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.