Correlation Between ZhongAn Online and INTERSHOP Communications

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

Diversification Opportunities for ZhongAn Online and INTERSHOP Communications

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between ZhongAn and INTERSHOP is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding ZhongAn Online P and INTERSHOP Communications Aktie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERSHOP Communications 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 INTERSHOP Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERSHOP Communications has no effect on the direction of ZhongAn Online i.e., ZhongAn Online and INTERSHOP Communications go up and down completely randomly.

Pair Corralation between ZhongAn Online and INTERSHOP Communications

Assuming the 90 days trading horizon ZhongAn Online P is expected to under-perform the INTERSHOP Communications. But the stock apears to be less risky and, when comparing its historical volatility, ZhongAn Online P is 1.5 times less risky than INTERSHOP Communications. The stock trades about -0.51 of its potential returns per unit of risk. The INTERSHOP Communications Aktiengesellschaft is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  190.00  in INTERSHOP Communications Aktiengesellschaft on October 11, 2024 and sell it today you would lose (10.00) from holding INTERSHOP Communications Aktiengesellschaft or give up 5.26% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy94.44%
ValuesDaily Returns

ZhongAn Online P  vs.  INTERSHOP Communications Aktie

 Performance 
       Timeline  
ZhongAn Online P 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ZhongAn Online P has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
INTERSHOP Communications 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, INTERSHOP Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ZhongAn Online and INTERSHOP Communications Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ZhongAn Online and INTERSHOP Communications

The main advantage of trading using opposite ZhongAn Online and INTERSHOP Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZhongAn Online position performs unexpectedly, INTERSHOP Communications 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 INTERSHOP Communications will offset losses from the drop in INTERSHOP Communications' long position.
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The idea behind ZhongAn Online P and INTERSHOP Communications Aktiengesellschaft 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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