Correlation Between Green World and Zhen Ding
Can any of the company-specific risk be diversified away by investing in both Green World and Zhen Ding 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 Green World and Zhen Ding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green World Fintech and Zhen Ding Technology, you can compare the effects of market volatilities on Green World and Zhen Ding 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 Green World with a short position of Zhen Ding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green World and Zhen Ding.
Diversification Opportunities for Green World and Zhen Ding
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Green and Zhen is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Green World Fintech and Zhen Ding Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhen Ding Technology and Green World 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 Green World Fintech are associated (or correlated) with Zhen Ding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhen Ding Technology has no effect on the direction of Green World i.e., Green World and Zhen Ding go up and down completely randomly.
Pair Corralation between Green World and Zhen Ding
Assuming the 90 days trading horizon Green World Fintech is expected to generate 1.76 times more return on investment than Zhen Ding. However, Green World is 1.76 times more volatile than Zhen Ding Technology. It trades about 0.09 of its potential returns per unit of risk. Zhen Ding Technology is currently generating about 0.03 per unit of risk. If you would invest 2,157 in Green World Fintech on September 25, 2024 and sell it today you would earn a total of 4,233 from holding Green World Fintech or generate 196.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 99.79% |
Values | Daily Returns |
Green World Fintech vs. Zhen Ding Technology
Performance |
Timeline |
Green World Fintech |
Zhen Ding Technology |
Green World and Zhen Ding Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Green World and Zhen Ding
The main advantage of trading using opposite Green World and Zhen Ding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green World position performs unexpectedly, Zhen Ding 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 Zhen Ding will offset losses from the drop in Zhen Ding's long position.Green World vs. Digital China Holdings | Green World vs. Acer E Enabling Service | Green World vs. Sysage Technology Co | Green World vs. Wistron Information Technology |
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Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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