Correlation Between ZhongAn Online and China DatangRenewable
Can any of the company-specific risk be diversified away by investing in both ZhongAn Online and China DatangRenewable 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 DatangRenewable 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 Datang, you can compare the effects of market volatilities on ZhongAn Online and China DatangRenewable 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 DatangRenewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZhongAn Online and China DatangRenewable.
Diversification Opportunities for ZhongAn Online and China DatangRenewable
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ZhongAn and China is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding ZhongAn Online P and China Datang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China DatangRenewable 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 DatangRenewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China DatangRenewable has no effect on the direction of ZhongAn Online i.e., ZhongAn Online and China DatangRenewable go up and down completely randomly.
Pair Corralation between ZhongAn Online and China DatangRenewable
Assuming the 90 days trading horizon ZhongAn Online P is expected to generate 1.04 times more return on investment than China DatangRenewable. However, ZhongAn Online is 1.04 times more volatile than China Datang. It trades about 0.16 of its potential returns per unit of risk. China Datang is currently generating about 0.16 per unit of risk. If you would invest 133.00 in ZhongAn Online P on November 9, 2024 and sell it today you would earn a total of 12.00 from holding ZhongAn Online P or generate 9.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZhongAn Online P vs. China Datang
Performance |
| Timeline |
| ZhongAn Online P |
| China DatangRenewable |
ZhongAn Online and China DatangRenewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZhongAn Online and China DatangRenewable
The main advantage of trading using opposite ZhongAn Online and China DatangRenewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZhongAn Online position performs unexpectedly, China DatangRenewable 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 DatangRenewable will offset losses from the drop in China DatangRenewable's long position.| ZhongAn Online vs. SQUIRREL MEDIA SA | ZhongAn Online vs. Elmos Semiconductor SE | ZhongAn Online vs. CNVISION MEDIA | ZhongAn Online vs. PROSIEBENSAT1 MEDIADR4 |
| China DatangRenewable vs. Chunghwa Telecom Co | China DatangRenewable vs. New Residential Investment | China DatangRenewable vs. Japan Asia Investment | China DatangRenewable vs. Ribbon Communications |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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