Correlation Between Zhongchao and Vaporbrands Intl

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

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

Diversification Opportunities for Zhongchao and Vaporbrands Intl

0.4

Correlation Coefficient

Zhongchao  Vaporbrands Intl

Very weak diversification

The 3 months correlation between Zhongchao and Vaporbrands is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Zhongchao and Vaporbrands Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaporbrands Intl and Zhongchao 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 Zhongchao are associated (or correlated) with Vaporbrands Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaporbrands Intl has no effect on the direction of Zhongchao i.e., Zhongchao and Vaporbrands Intl go up and down completely randomly.

Pair Corralation between Zhongchao and Vaporbrands Intl

Given the investment horizon of 90 days Zhongchao is expected to under-perform the Vaporbrands Intl. But the stock apears to be less risky and, when comparing its historical volatility, Zhongchao is 1.37 times less risky than Vaporbrands Intl. The stock trades about 0.0 of its potential returns per unit of risk. The Vaporbrands Intl is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.35  in Vaporbrands Intl on May 7, 2025 and sell it today you would lose (0.05) from holding Vaporbrands Intl or give up 3.7% of portfolio value over 90 days.

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

Zhongchao  vs.  Vaporbrands Intl

Zhongchao

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zhongchao has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Zhongchao is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Vaporbrands Intl

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vaporbrands Intl are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Vaporbrands Intl reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhongchao and Vaporbrands Intl

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

The idea behind Zhongchao and Vaporbrands Intl 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 Stocks Directory module to find actively traded stocks across global markets.