Correlation Between ZhongAn Online and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both ZhongAn Online and CHINA EDUCATION 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 CHINA EDUCATION 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 CHINA EDUCATION GROUP, you can compare the effects of market volatilities on ZhongAn Online and CHINA EDUCATION 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 CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZhongAn Online and CHINA EDUCATION.
Diversification Opportunities for ZhongAn Online and CHINA EDUCATION
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ZhongAn and CHINA is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding ZhongAn Online P and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION GROUP 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 CHINA EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of ZhongAn Online i.e., ZhongAn Online and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between ZhongAn Online and CHINA EDUCATION
Assuming the 90 days trading horizon ZhongAn Online is expected to generate 4.16 times less return on investment than CHINA EDUCATION. But when comparing it to its historical volatility, ZhongAn Online P is 1.16 times less risky than CHINA EDUCATION. It trades about 0.02 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 20.00 in CHINA EDUCATION GROUP on October 29, 2024 and sell it today you would earn a total of 21.00 from holding CHINA EDUCATION GROUP or generate 105.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
ZhongAn Online P vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| ZhongAn Online P |
| CHINA EDUCATION GROUP |
ZhongAn Online and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZhongAn Online and CHINA EDUCATION
The main advantage of trading using opposite ZhongAn Online and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZhongAn Online position performs unexpectedly, CHINA EDUCATION 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 CHINA EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.| ZhongAn Online vs. STGEORGE MINING LTD | ZhongAn Online vs. DALATA HOTEL | ZhongAn Online vs. PPHE HOTEL GROUP | ZhongAn Online vs. Sunstone Hotel Investors |
| CHINA EDUCATION vs. AIR PRODCHEMICALS | CHINA EDUCATION vs. Cal Maine Foods | CHINA EDUCATION vs. PURE FOODS TASMANIA | CHINA EDUCATION vs. Carnegie Clean Energy |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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