Correlation Between Zhongrun Resources and Oppein Home

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

By analyzing existing cross correlation between Zhongrun Resources Investment and Oppein Home Group, you can compare the effects of market volatilities on Zhongrun Resources and Oppein Home 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 Zhongrun Resources with a short position of Oppein Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongrun Resources and Oppein Home.

Diversification Opportunities for Zhongrun Resources and Oppein Home

0.84

Correlation Coefficient

Zhongrun Resources  Oppein Home

Very poor diversification

The 3 months correlation between Zhongrun and Oppein is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Zhongrun Resources Investment and Oppein Home Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppein Home Group and Zhongrun Resources 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 Zhongrun Resources Investment are associated (or correlated) with Oppein Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppein Home Group has no effect on the direction of Zhongrun Resources i.e., Zhongrun Resources and Oppein Home go up and down completely randomly.

Pair Corralation between Zhongrun Resources and Oppein Home

Assuming the 90 days trading horizon Zhongrun Resources Investment is expected to generate 0.96 times more return on investment than Oppein Home. However, Zhongrun Resources Investment is 1.05 times less risky than Oppein Home. It trades about 0.53 of its potential returns per unit of risk. Oppein Home Group is currently generating about 0.17 per unit of risk. If you would invest  117.00  in Zhongrun Resources Investment on August 23, 2024 and sell it today you would earn a total of  243.00  from holding Zhongrun Resources Investment or generate 207.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.28%
Values	Daily Returns

Zhongrun Resources Investment  vs.  Oppein Home Group

Zhongrun Resources

Risk-Adjusted Performance

41 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongrun Resources Investment are ranked lower than 41 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhongrun Resources sustained solid returns over the last few months and may actually be approaching a breakup point.

Oppein Home Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oppein Home Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Oppein Home sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhongrun Resources and Oppein Home

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

The idea behind Zhongrun Resources Investment and Oppein Home Group 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .