Correlation Between OAKTRSPECLENDNEW and ZTE

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

By analyzing existing cross correlation between OAKTRSPECLENDNEW and ZTE Corporation, you can compare the effects of market volatilities on OAKTRSPECLENDNEW and ZTE 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 OAKTRSPECLENDNEW with a short position of ZTE. Check out your portfolio center. Please also check ongoing floating volatility patterns of OAKTRSPECLENDNEW and ZTE.

Diversification Opportunities for OAKTRSPECLENDNEW and ZTE

0.49

Correlation Coefficient

OAKTRSPECLENDNEW  ZTE

Very weak diversification

The 3 months correlation between OAKTRSPECLENDNEW and ZTE is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding OAKTRSPECLENDNEW and ZTE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTE Corporation and OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW are associated (or correlated) with ZTE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZTE Corporation has no effect on the direction of OAKTRSPECLENDNEW i.e., OAKTRSPECLENDNEW and ZTE go up and down completely randomly.

Pair Corralation between OAKTRSPECLENDNEW and ZTE

Assuming the 90 days trading horizon OAKTRSPECLENDNEW is expected to generate 8.8 times less return on investment than ZTE. But when comparing it to its historical volatility, OAKTRSPECLENDNEW is 3.22 times less risky than ZTE. It trades about 0.04 of its potential returns per unit of risk. ZTE Corporation is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  176.00  in ZTE Corporation on September 3, 2024 and sell it today you would earn a total of  49.00  from holding ZTE Corporation or generate 27.84% return on investment over 90 days.

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

OAKTRSPECLENDNEW  vs.  ZTE Corp.

OAKTRSPECLENDNEW

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OAKTRSPECLENDNEW are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, OAKTRSPECLENDNEW is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ZTE Corporation

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZTE Corporation are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ZTE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OAKTRSPECLENDNEW and ZTE

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

The idea behind OAKTRSPECLENDNEW and ZTE Corporation 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.