Correlation Between ZhongAn Online and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both ZhongAn Online and NMI Holdings 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 ZhongAn Online and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZhongAn Online P and NMI Holdings, you can compare the effects of market volatilities on ZhongAn Online and NMI Holdings 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 ZhongAn Online with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZhongAn Online and NMI Holdings.
Diversification Opportunities for ZhongAn Online and NMI Holdings
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ZhongAn and NMI is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ZhongAn Online P and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and ZhongAn Online 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 ZhongAn Online P are associated (or correlated) with NMI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMI Holdings has no effect on the direction of ZhongAn Online i.e., ZhongAn Online and NMI Holdings go up and down completely randomly.
Pair Corralation between ZhongAn Online and NMI Holdings
Assuming the 90 days trading horizon ZhongAn Online P is expected to under-perform the NMI Holdings. In addition to that, ZhongAn Online is 1.03 times more volatile than NMI Holdings. It trades about -0.48 of its total potential returns per unit of risk. NMI Holdings is currently generating about -0.14 per unit of volatility. If you would invest 3,600 in NMI Holdings on October 12, 2024 and sell it today you would lose (140.00) from holding NMI Holdings or give up 3.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZhongAn Online P vs. NMI Holdings
Performance |
| Timeline |
| ZhongAn Online P |
| NMI Holdings |
ZhongAn Online and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZhongAn Online and NMI Holdings
The main advantage of trading using opposite ZhongAn Online and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZhongAn Online position performs unexpectedly, NMI Holdings 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 NMI Holdings will offset losses from the drop in NMI Holdings' long position.| ZhongAn Online vs. Direct Line Insurance | ZhongAn Online vs. BE Semiconductor Industries | ZhongAn Online vs. Tower Semiconductor | ZhongAn Online vs. Sun Life Financial |
| NMI Holdings vs. ZhongAn Online P | NMI Holdings vs. Singapore Airlines Limited | NMI Holdings vs. PRECISION DRILLING P | NMI Holdings vs. CARSALESCOM |
Check out your portfolio center.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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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