Correlation Between ZhongAn Online and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both ZhongAn Online and STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS, you can compare the effects of market volatilities on ZhongAn Online and STMICROELECTRONICS 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 STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZhongAn Online and STMICROELECTRONICS.
Diversification Opportunities for ZhongAn Online and STMICROELECTRONICS
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ZhongAn and STMICROELECTRONICS is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding ZhongAn Online P and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS 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 STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of ZhongAn Online i.e., ZhongAn Online and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between ZhongAn Online and STMICROELECTRONICS
Assuming the 90 days trading horizon ZhongAn Online P is expected to under-perform the STMICROELECTRONICS. But the stock apears to be less risky and, when comparing its historical volatility, ZhongAn Online P is 1.35 times less risky than STMICROELECTRONICS. The stock trades about -0.51 of its potential returns per unit of risk. The STMICROELECTRONICS is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 2,503 in STMICROELECTRONICS on October 11, 2024 and sell it today you would lose (57.00) from holding STMICROELECTRONICS or give up 2.28% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 94.44% |
Values | Daily Returns |
ZhongAn Online P vs. STMICROELECTRONICS
Performance |
Timeline |
ZhongAn Online P |
STMICROELECTRONICS |
ZhongAn Online and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ZhongAn Online and STMICROELECTRONICS
The main advantage of trading using opposite ZhongAn Online and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZhongAn Online position performs unexpectedly, STMICROELECTRONICS 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 STMICROELECTRONICS will offset losses from the drop in STMICROELECTRONICS's long position.ZhongAn Online vs. STMICROELECTRONICS | ZhongAn Online vs. ECHO INVESTMENT ZY | ZhongAn Online vs. AOI Electronics Co | ZhongAn Online vs. Renesas Electronics |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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