Correlation Between Zhong Yang and Riot Blockchain

Can any of the company-specific risk be diversified away by investing in both Zhong Yang and Riot Blockchain 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 Riot Blockchain 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 Riot Blockchain, you can compare the effects of market volatilities on Zhong Yang and Riot Blockchain 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 Riot Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhong Yang and Riot Blockchain.

Diversification Opportunities for Zhong Yang and Riot Blockchain

0.66

Correlation Coefficient

Zhong Yang  Riot Blockchain

Poor diversification

The 3 months correlation between Zhong and Riot is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Zhong Yang Financial and Riot Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riot Blockchain 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 Riot Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riot Blockchain has no effect on the direction of Zhong Yang i.e., Zhong Yang and Riot Blockchain go up and down completely randomly.

Pair Corralation between Zhong Yang and Riot Blockchain

Considering the 90-day investment horizon Zhong Yang Financial is expected to generate 4.66 times more return on investment than Riot Blockchain. However, Zhong Yang is 4.66 times more volatile than Riot Blockchain. It trades about 0.16 of its potential returns per unit of risk. Riot Blockchain is currently generating about 0.29 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.  Riot Blockchain

Zhong Yang Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhong Yang Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Zhong Yang is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Riot Blockchain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riot Blockchain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in November 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Zhong Yang and Riot Blockchain

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

The idea behind Zhong Yang Financial and Riot Blockchain 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.