Correlation Between Zig Sheng and Eclat Textile

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

By analyzing existing cross correlation between Zig Sheng Industrial and Eclat Textile Co, you can compare the effects of market volatilities on Zig Sheng and Eclat Textile 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 Zig Sheng with a short position of Eclat Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zig Sheng and Eclat Textile.

Diversification Opportunities for Zig Sheng and Eclat Textile

-0.03

Correlation Coefficient

Zig Sheng  Eclat Textile

Good diversification

The 3 months correlation between Zig and Eclat is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Zig Sheng Industrial and Eclat Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eclat Textile and Zig Sheng 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 Zig Sheng Industrial are associated (or correlated) with Eclat Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eclat Textile has no effect on the direction of Zig Sheng i.e., Zig Sheng and Eclat Textile go up and down completely randomly.

Pair Corralation between Zig Sheng and Eclat Textile

Assuming the 90 days trading horizon Zig Sheng Industrial is expected to generate 1.7 times more return on investment than Eclat Textile. However, Zig Sheng is 1.7 times more volatile than Eclat Textile Co. It trades about 0.1 of its potential returns per unit of risk. Eclat Textile Co is currently generating about -0.12 per unit of risk. If you would invest  1,230  in Zig Sheng Industrial on March 4, 2024 and sell it today you would earn a total of  190.00  from holding Zig Sheng Industrial or generate 15.45% return on investment over 90 days.

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

Zig Sheng Industrial  vs.  Eclat Textile Co

Zig Sheng Industrial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zig Sheng Industrial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Zig Sheng showed solid returns over the last few months and may actually be approaching a breakup point.

Eclat Textile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eclat Textile Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Zig Sheng and Eclat Textile

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

The idea behind Zig Sheng Industrial and Eclat Textile Co 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.