Correlation Between Makalot Industrial and Zig Sheng

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

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

Diversification Opportunities for Makalot Industrial and Zig Sheng

0.33

Correlation Coefficient

Makalot Industrial  Zig Sheng

Weak diversification

The 3 months correlation between Makalot and Zig is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Makalot Industrial Co and Zig Sheng Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zig Sheng Industrial and Makalot Industrial 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 Makalot Industrial Co are associated (or correlated) with Zig Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zig Sheng Industrial has no effect on the direction of Makalot Industrial i.e., Makalot Industrial and Zig Sheng go up and down completely randomly.

Pair Corralation between Makalot Industrial and Zig Sheng

Assuming the 90 days trading horizon Makalot Industrial Co is expected to generate 0.53 times more return on investment than Zig Sheng. However, Makalot Industrial Co is 1.9 times less risky than Zig Sheng. It trades about 0.07 of its potential returns per unit of risk. Zig Sheng Industrial is currently generating about -0.04 per unit of risk. If you would invest  38,700  in Makalot Industrial Co on March 7, 2024 and sell it today you would earn a total of  750.00  from holding Makalot Industrial Co or generate 1.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Makalot Industrial Co  vs.  Zig Sheng Industrial

Makalot Industrial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Makalot Industrial Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Makalot Industrial may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Zig Sheng Industrial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zig Sheng Industrial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Zig Sheng may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Makalot Industrial and Zig Sheng

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

The idea behind Makalot Industrial Co and Zig Sheng Industrial 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.