Correlation Between Zhongsheng Group and Copart

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

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

Diversification Opportunities for Zhongsheng Group and Copart

-0.23

Correlation Coefficient

Zhongsheng Group  Copart

Very good diversification

The 3 months correlation between Zhongsheng and Copart is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Zhongsheng Group Holdings and Copart Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copart Inc and Zhongsheng Group 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 Zhongsheng Group Holdings are associated (or correlated) with Copart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copart Inc has no effect on the direction of Zhongsheng Group i.e., Zhongsheng Group and Copart go up and down completely randomly.

Pair Corralation between Zhongsheng Group and Copart

Assuming the 90 days horizon Zhongsheng Group Holdings is expected to generate 3.39 times more return on investment than Copart. However, Zhongsheng Group is 3.39 times more volatile than Copart Inc. It trades about 0.15 of its potential returns per unit of risk. Copart Inc is currently generating about -0.16 per unit of risk. If you would invest  1,710  in Zhongsheng Group Holdings on January 30, 2024 and sell it today you would earn a total of  182.00  from holding Zhongsheng Group Holdings or generate 10.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Zhongsheng Group Holdings  vs.  Copart Inc

Zhongsheng Group Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongsheng Group Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Zhongsheng Group may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Copart Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Copart Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Copart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhongsheng Group and Copart

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

The idea behind Zhongsheng Group Holdings and Copart Inc 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.