Correlation Between SAITECH Global and Zhong Yang

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

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

Diversification Opportunities for SAITECH Global and Zhong Yang

-0.08

Correlation Coefficient

SAITECH Global  Zhong Yang

Good diversification

The 3 months correlation between SAITECH and Zhong is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding SAITECH Global and Zhong Yang Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhong Yang Financial and SAITECH Global 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 SAITECH Global are associated (or correlated) with Zhong Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhong Yang Financial has no effect on the direction of SAITECH Global i.e., SAITECH Global and Zhong Yang go up and down completely randomly.

Pair Corralation between SAITECH Global and Zhong Yang

Considering the 90-day investment horizon SAITECH Global is expected to under-perform the Zhong Yang. In addition to that, SAITECH Global is 1.4 times more volatile than Zhong Yang Financial. It trades about -0.14 of its total potential returns per unit of risk. Zhong Yang Financial is currently generating about -0.04 per unit of volatility. If you would invest  270.00  in Zhong Yang Financial on February 2, 2024 and sell it today you would lose (13.00) from holding Zhong Yang Financial or give up 4.81% of portfolio value over 90 days.

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

SAITECH Global  vs.  Zhong Yang Financial

SAITECH Global

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SAITECH Global are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, SAITECH Global demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Zhong Yang Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhong Yang Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Zhong Yang reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAITECH Global and Zhong Yang

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

The idea behind SAITECH Global and Zhong Yang Financial 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..