Correlation Between Zhejiang Kingland and Cowealth Medical

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

By analyzing existing cross correlation between Zhejiang Kingland Pipeline and Cowealth Medical China, you can compare the effects of market volatilities on Zhejiang Kingland and Cowealth Medical 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 Kingland with a short position of Cowealth Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Kingland and Cowealth Medical.

Diversification Opportunities for Zhejiang Kingland and Cowealth Medical

0.46

Correlation Coefficient

Zhejiang Kingland  Cowealth Medical

Very weak diversification

The 3 months correlation between Zhejiang and Cowealth is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Kingland Pipeline and Cowealth Medical China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cowealth Medical China and Zhejiang Kingland 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 Kingland Pipeline are associated (or correlated) with Cowealth Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cowealth Medical China has no effect on the direction of Zhejiang Kingland i.e., Zhejiang Kingland and Cowealth Medical go up and down completely randomly.

Pair Corralation between Zhejiang Kingland and Cowealth Medical

Assuming the 90 days trading horizon Zhejiang Kingland Pipeline is expected to under-perform the Cowealth Medical. But the stock apears to be less risky and, when comparing its historical volatility, Zhejiang Kingland Pipeline is 1.57 times less risky than Cowealth Medical. The stock trades about -0.15 of its potential returns per unit of risk. The Cowealth Medical China is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  750.00  in Cowealth Medical China on September 29, 2024 and sell it today you would lose (25.00) from holding Cowealth Medical China or give up 3.33% of portfolio value over 90 days.

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

Zhejiang Kingland Pipeline  vs.  Cowealth Medical China

Zhejiang Kingland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhejiang Kingland Pipeline has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Zhejiang Kingland is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cowealth Medical China

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cowealth Medical China are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cowealth Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zhejiang Kingland and Cowealth Medical

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

The idea behind Zhejiang Kingland Pipeline and Cowealth Medical China 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.