Correlation Between CDL INVESTMENT and ZIJIN MINH

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

By analyzing existing cross correlation between CDL INVESTMENT and ZIJIN MINH UNSPADR20, you can compare the effects of market volatilities on CDL INVESTMENT and ZIJIN MINH 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 CDL INVESTMENT with a short position of ZIJIN MINH. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDL INVESTMENT and ZIJIN MINH.

Diversification Opportunities for CDL INVESTMENT and ZIJIN MINH

-0.29

Correlation Coefficient

CDL INVESTMENT  ZIJIN MINH

Very good diversification

The 3 months correlation between CDL and ZIJIN is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding CDL INVESTMENT and ZIJIN MINH UNSPADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIJIN MINH UNSPADR20 and CDL INVESTMENT 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 CDL INVESTMENT are associated (or correlated) with ZIJIN MINH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIJIN MINH UNSPADR20 has no effect on the direction of CDL INVESTMENT i.e., CDL INVESTMENT and ZIJIN MINH go up and down completely randomly.

Pair Corralation between CDL INVESTMENT and ZIJIN MINH

Assuming the 90 days trading horizon CDL INVESTMENT is expected to under-perform the ZIJIN MINH. But the stock apears to be less risky and, when comparing its historical volatility, CDL INVESTMENT is 1.46 times less risky than ZIJIN MINH. The stock trades about -0.07 of its potential returns per unit of risk. The ZIJIN MINH UNSPADR20 is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,380  in ZIJIN MINH UNSPADR20 on July 3, 2024 and sell it today you would earn a total of  400.00  from holding ZIJIN MINH UNSPADR20 or generate 11.83% return on investment over 90 days.

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

CDL INVESTMENT  vs.  ZIJIN MINH UNSPADR20

CDL INVESTMENT

Risk-Adjusted Performance

3 of 100

Insignificant

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

ZIJIN MINH UNSPADR20

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZIJIN MINH UNSPADR20 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ZIJIN MINH is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CDL INVESTMENT and ZIJIN MINH

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

The idea behind CDL INVESTMENT and ZIJIN MINH UNSPADR20 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.