Correlation Between Zhong Yang and Netcapital
Can any of the company-specific risk be diversified away by investing in both Zhong Yang and Netcapital 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 Zhong Yang and Netcapital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zhong Yang Financial and Netcapital, you can compare the effects of market volatilities on Zhong Yang and Netcapital 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 Zhong Yang with a short position of Netcapital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhong Yang and Netcapital.
Diversification Opportunities for Zhong Yang and Netcapital
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zhong and Netcapital is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Zhong Yang Financial and Netcapital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcapital and Zhong Yang 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 Zhong Yang Financial are associated (or correlated) with Netcapital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcapital has no effect on the direction of Zhong Yang i.e., Zhong Yang and Netcapital go up and down completely randomly.
Pair Corralation between Zhong Yang and Netcapital
Considering the 90-day investment horizon Zhong Yang Financial is expected to generate 2.05 times more return on investment than Netcapital. However, Zhong Yang is 2.05 times more volatile than Netcapital. It trades about 0.16 of its potential returns per unit of risk. Netcapital is currently generating about -0.32 per unit of risk. If you would invest 150.00 in Zhong Yang Financial on July 16, 2024 and sell it today you would earn a total of 57.00 from holding Zhong Yang Financial or generate 38.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Zhong Yang Financial vs. Netcapital
Performance |
Timeline |
Zhong Yang Financial |
Netcapital |
Zhong Yang and Netcapital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Zhong Yang and Netcapital
The main advantage of trading using opposite Zhong Yang and Netcapital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhong Yang position performs unexpectedly, Netcapital 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 Netcapital will offset losses from the drop in Netcapital's long position.Zhong Yang vs. Netcapital | Zhong Yang vs. Top KingWin Ltd | Zhong Yang vs. Applied Blockchain | Zhong Yang vs. Magic Empire Global |
Netcapital vs. Applied Blockchain | Netcapital vs. Zhong Yang Financial | Netcapital vs. Magic Empire Global | Netcapital vs. Lazard |
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 Stocks Directory module to find actively traded stocks across global markets.
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