Correlation Between CARSALESCOM and ZhongAn Online

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Can any of the company-specific risk be diversified away by investing in both CARSALESCOM 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 CARSALESCOM and ZhongAn Online into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and ZhongAn Online P, you can compare the effects of market volatilities on CARSALESCOM 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 CARSALESCOM with a short position of ZhongAn Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALESCOM and ZhongAn Online.

Diversification Opportunities for CARSALESCOM and ZhongAn Online

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between CARSALESCOM and ZhongAn is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM 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 CARSALESCOM 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 CARSALESCOM 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 CARSALESCOM i.e., CARSALESCOM and ZhongAn Online go up and down completely randomly.

Pair Corralation between CARSALESCOM and ZhongAn Online

Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.82 times more return on investment than ZhongAn Online. However, CARSALESCOM is 1.22 times less risky than ZhongAn Online. It trades about -0.12 of its potential returns per unit of risk. ZhongAn Online P is currently generating about -0.55 per unit of risk. If you would invest  2,460  in CARSALESCOM on October 10, 2024 and sell it today you would lose (100.00) from holding CARSALESCOM or give up 4.07% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

CARSALESCOM  vs.  ZhongAn Online P

 Performance 
       Timeline  
CARSALESCOM 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in CARSALESCOM are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, CARSALESCOM is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
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 fragile 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.

CARSALESCOM and ZhongAn Online Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CARSALESCOM and ZhongAn Online

The main advantage of trading using opposite CARSALESCOM and ZhongAn Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALESCOM 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.
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The idea behind CARSALESCOM and ZhongAn Online P 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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