Correlation Between Federal Agricultural and ZhongAn Online
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and ZhongAn Online 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 Federal Agricultural and ZhongAn Online into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Agricultural Mortgage and ZhongAn Online P, you can compare the effects of market volatilities on Federal Agricultural and ZhongAn Online 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 Federal Agricultural with a short position of ZhongAn Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and ZhongAn Online.
Diversification Opportunities for Federal Agricultural and ZhongAn Online
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Federal and ZhongAn is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and ZhongAn Online P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZhongAn Online P and Federal Agricultural 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 Federal Agricultural Mortgage are associated (or correlated) with ZhongAn Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZhongAn Online P has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and ZhongAn Online go up and down completely randomly.
Pair Corralation between Federal Agricultural and ZhongAn Online
Assuming the 90 days horizon Federal Agricultural is expected to generate 5.02 times less return on investment than ZhongAn Online. But when comparing it to its historical volatility, Federal Agricultural Mortgage is 1.59 times less risky than ZhongAn Online. It trades about 0.04 of its potential returns per unit of risk. ZhongAn Online P is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 137.00 in ZhongAn Online P on November 3, 2024 and sell it today you would earn a total of 8.00 from holding ZhongAn Online P or generate 5.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. ZhongAn Online P
Performance |
| Timeline |
| Federal Agricultural |
| ZhongAn Online P |
Federal Agricultural and ZhongAn Online Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and ZhongAn Online
The main advantage of trading using opposite Federal Agricultural and ZhongAn Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, ZhongAn Online 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 ZhongAn Online will offset losses from the drop in ZhongAn Online's long position.| Federal Agricultural vs. Townsquare Media | Federal Agricultural vs. KOBE STEEL LTD | Federal Agricultural vs. Nippon Steel | Federal Agricultural vs. CNVISION MEDIA |
| ZhongAn Online vs. SENECA FOODS A | ZhongAn Online vs. Casio Computer CoLtd | ZhongAn Online vs. GMO Internet | ZhongAn Online vs. Verizon 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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