Correlation Between Zhong Yang and Morgan Stanley

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

Diversification Opportunities for Zhong Yang and Morgan Stanley

0.77

Correlation Coefficient

Zhong Yang  Morgan Stanley

Poor diversification

The 3 months correlation between Zhong and Morgan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Zhong Yang Financial and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley 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 Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley has no effect on the direction of Zhong Yang i.e., Zhong Yang and Morgan Stanley go up and down completely randomly.

Pair Corralation between Zhong Yang and Morgan Stanley

Considering the 90-day investment horizon Zhong Yang Financial is expected to under-perform the Morgan Stanley. In addition to that, Zhong Yang is 7.03 times more volatile than Morgan Stanley. It trades about -0.04 of its total potential returns per unit of risk. Morgan Stanley is currently generating about 0.02 per unit of volatility. If you would invest  1,601  in Morgan Stanley on February 10, 2025 and sell it today you would earn a total of  119.00  from holding Morgan Stanley or generate 7.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.99%
Values	Daily Returns

Zhong Yang Financial  vs.  Morgan Stanley

Zhong Yang Financial

Risk-Adjusted Performance

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 conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in June 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Morgan Stanley

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Stanley has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Preferred Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Zhong Yang and Morgan Stanley

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

The idea behind Zhong Yang Financial and Morgan Stanley 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.