Correlation Between Zhejiang Expressway and American Premium

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

By analyzing existing cross correlation between Zhejiang Expressway Co and American Premium Water, you can compare the effects of market volatilities on Zhejiang Expressway and American Premium 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 Zhejiang Expressway with a short position of American Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Expressway and American Premium.

Diversification Opportunities for Zhejiang Expressway and American Premium

0.25

Correlation Coefficient

Zhejiang Expressway  American Premium

Modest diversification

The 3 months correlation between Zhejiang and American is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Expressway Co and American Premium Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Premium Water and Zhejiang Expressway 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 Zhejiang Expressway Co are associated (or correlated) with American Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Premium Water has no effect on the direction of Zhejiang Expressway i.e., Zhejiang Expressway and American Premium go up and down completely randomly.

Pair Corralation between Zhejiang Expressway and American Premium

Assuming the 90 days horizon Zhejiang Expressway is expected to generate 330.44 times less return on investment than American Premium. But when comparing it to its historical volatility, Zhejiang Expressway Co is 162.92 times less risky than American Premium. It trades about 0.18 of its potential returns per unit of risk. American Premium Water is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  0.00  in American Premium Water on May 5, 2025 and sell it today you would earn a total of  0.01  from holding American Premium Water or generate 9.223372036854776E16% return on investment over 90 days.

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

Zhejiang Expressway Co  vs.  American Premium Water

Zhejiang Expressway

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Expressway Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Zhejiang Expressway reported solid returns over the last few months and may actually be approaching a breakup point.

American Premium Water

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in American Premium Water are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, American Premium demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhejiang Expressway and American Premium

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

The idea behind Zhejiang Expressway Co and American Premium Water 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 Commodity Directory module to find actively traded commodities issued by global exchanges.