Correlation Between ARISTOCRAT LEISURE and ZhongAn Online
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE and ZhongAn Online into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and ZhongAn Online P, you can compare the effects of market volatilities on ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE with a short position of ZhongAn Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and ZhongAn Online.
Diversification Opportunities for ARISTOCRAT LEISURE and ZhongAn Online
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ARISTOCRAT and ZhongAn is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and ZhongAn Online go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and ZhongAn Online
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 0.25 times more return on investment than ZhongAn Online. However, ARISTOCRAT LEISURE is 4.06 times less risky than ZhongAn Online. It trades about 0.19 of its potential returns per unit of risk. ZhongAn Online P is currently generating about 0.01 per unit of risk. If you would invest 3,207 in ARISTOCRAT LEISURE on October 25, 2024 and sell it today you would earn a total of 993.00 from holding ARISTOCRAT LEISURE or generate 30.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. ZhongAn Online P
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| ZhongAn Online P |
ARISTOCRAT LEISURE and ZhongAn Online Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and ZhongAn Online
The main advantage of trading using opposite ARISTOCRAT LEISURE and ZhongAn Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE 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.| ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc |
| ZhongAn Online vs. Cal Maine Foods | ZhongAn Online vs. UNITED RENTALS | ZhongAn Online vs. WILLIS LEASE FIN | ZhongAn Online vs. GRENKELEASING Dusseldorf |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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