Correlation Between ZhongAn Online and Nike

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

Diversification Opportunities for ZhongAn Online and Nike

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between ZhongAn and Nike is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding ZhongAn Online P and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of ZhongAn Online i.e., ZhongAn Online and Nike go up and down completely randomly.

Pair Corralation between ZhongAn Online and Nike

Assuming the 90 days trading horizon ZhongAn Online P is expected to under-perform the Nike. In addition to that, ZhongAn Online is 1.84 times more volatile than Nike Inc. It trades about -0.11 of its total potential returns per unit of risk. Nike Inc is currently generating about -0.03 per unit of volatility. If you would invest  7,015  in Nike Inc on October 17, 2024 and sell it today you would lose (165.00) from holding Nike Inc or give up 2.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ZhongAn Online P  vs.  Nike Inc

 Performance 
       Timeline  
ZhongAn Online P 

Risk-Adjusted Performance

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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 latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Nike Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ZhongAn Online and Nike Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ZhongAn Online and Nike

The main advantage of trading using opposite ZhongAn Online and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZhongAn Online position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.
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The idea behind ZhongAn Online P and Nike Inc 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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