Correlation Between Enbridge and Zhongsheng Group
Can any of the company-specific risk be diversified away by investing in both Enbridge and Zhongsheng Group 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 Enbridge and Zhongsheng Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge and Zhongsheng Group Holdings, you can compare the effects of market volatilities on Enbridge and Zhongsheng Group 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 Enbridge with a short position of Zhongsheng Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and Zhongsheng Group.
Diversification Opportunities for Enbridge and Zhongsheng Group
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Enbridge and Zhongsheng is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and Zhongsheng Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongsheng Group Holdings and Enbridge 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 Enbridge are associated (or correlated) with Zhongsheng Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongsheng Group Holdings has no effect on the direction of Enbridge i.e., Enbridge and Zhongsheng Group go up and down completely randomly.
Pair Corralation between Enbridge and Zhongsheng Group
Assuming the 90 days horizon Enbridge is expected to generate 5.71 times less return on investment than Zhongsheng Group. But when comparing it to its historical volatility, Enbridge is 8.99 times less risky than Zhongsheng Group. It trades about 0.13 of its potential returns per unit of risk. Zhongsheng Group Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 80.00 in Zhongsheng Group Holdings on September 24, 2024 and sell it today you would earn a total of 102.00 from holding Zhongsheng Group Holdings or generate 127.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Enbridge vs. Zhongsheng Group Holdings
Performance |
Timeline |
Enbridge |
Zhongsheng Group Holdings |
Enbridge and Zhongsheng Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Enbridge and Zhongsheng Group
The main advantage of trading using opposite Enbridge and Zhongsheng Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge position performs unexpectedly, Zhongsheng Group 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 Zhongsheng Group will offset losses from the drop in Zhongsheng Group's long position.Enbridge vs. Cheniere Energy | Enbridge vs. The Williams Companies | Enbridge vs. ONEOK Inc | Enbridge vs. Pembina Pipeline Corp |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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