Correlation Between Zhejiang Expressway and Ferrovial

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

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

Diversification Opportunities for Zhejiang Expressway and Ferrovial

-0.32

Correlation Coefficient

Zhejiang Expressway  Ferrovial

Very good diversification

The 3 months correlation between Zhejiang and Ferrovial is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Expressway Co and Ferrovial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrovial SA and Zhejiang Expressway 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 Zhejiang Expressway Co are associated (or correlated) with Ferrovial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrovial SA has no effect on the direction of Zhejiang Expressway i.e., Zhejiang Expressway and Ferrovial go up and down completely randomly.

Pair Corralation between Zhejiang Expressway and Ferrovial

If you would invest  66.00  in Zhejiang Expressway Co on September 5, 2024 and sell it today you would lose (1.00) from holding Zhejiang Expressway Co or give up 1.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Zhejiang Expressway Co  vs.  Ferrovial SA

Zhejiang Expressway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhejiang Expressway Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Zhejiang Expressway is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ferrovial SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ferrovial SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Ferrovial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zhejiang Expressway and Ferrovial

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

The idea behind Zhejiang Expressway Co and Ferrovial SA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.