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

CarsalesComZhongAnDiversified AwayCarsalesComZhongAnDiversified Away100%
0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between CarsalesCom and ZhongAn is 0.4. 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 horizon CarsalesCom is expected to generate 3.53 times less return on investment than ZhongAn Online. But when comparing it to its historical volatility, CarsalesCom is 2.57 times less risky than ZhongAn Online. It trades about 0.03 of its potential returns per unit of risk. ZhongAn Online P is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  137.00  in ZhongAn Online P on November 21, 2024 and sell it today you would earn a total of  39.00  from holding ZhongAn Online P or generate 28.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

CarsalesCom  vs.  ZhongAn Online P

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-505
JavaScript chart by amCharts 3.21.15WN6 1ZO
       Timeline  
CarsalesCom 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days CarsalesCom has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb21.52222.52323.52424.52525.5
ZhongAn Online P 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in ZhongAn Online P are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ZhongAn Online may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1.31.41.51.61.7

CarsalesCom and ZhongAn Online Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.77-2.08-1.38-0.680.00.681.352.032.71 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15WN6 1ZO
       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.
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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