Correlation Between ZhongAn Online and CarsalesCom
Can any of the company-specific risk be diversified away by investing in both ZhongAn Online and CarsalesCom 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 CarsalesCom 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 CarsalesCom Ltd ADR, you can compare the effects of market volatilities on ZhongAn Online and CarsalesCom 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 CarsalesCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZhongAn Online and CarsalesCom.
Diversification Opportunities for ZhongAn Online and CarsalesCom
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ZhongAn and CarsalesCom is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding ZhongAn Online P and CarsalesCom Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom ADR 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 CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom ADR has no effect on the direction of ZhongAn Online i.e., ZhongAn Online and CarsalesCom go up and down completely randomly.
Pair Corralation between ZhongAn Online and CarsalesCom
Assuming the 90 days horizon ZhongAn Online P is expected to under-perform the CarsalesCom. In addition to that, ZhongAn Online is 1.33 times more volatile than CarsalesCom Ltd ADR. It trades about -0.05 of its total potential returns per unit of risk. CarsalesCom Ltd ADR is currently generating about 0.05 per unit of volatility. If you would invest 2,983 in CarsalesCom Ltd ADR on October 11, 2024 and sell it today you would earn a total of 1,567 from holding CarsalesCom Ltd ADR or generate 52.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 88.89% |
| Values | Daily Returns |
ZhongAn Online P vs. CarsalesCom Ltd ADR
Performance |
| Timeline |
| ZhongAn Online P |
| CarsalesCom ADR |
ZhongAn Online and CarsalesCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZhongAn Online and CarsalesCom
The main advantage of trading using opposite ZhongAn Online and CarsalesCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZhongAn Online position performs unexpectedly, CarsalesCom 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 CarsalesCom will offset losses from the drop in CarsalesCom's long position.| ZhongAn Online vs. Progressive Corp | ZhongAn Online vs. White Mountains Insurance | ZhongAn Online vs. Chubb | ZhongAn Online vs. W R Berkley |
| CarsalesCom vs. Quizam Media | CarsalesCom vs. DGTL Holdings | CarsalesCom vs. Tinybeans Group Limited | CarsalesCom vs. Sabio Holdings |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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