Correlation Between ZhongAn Online and Deluxe

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Can any of the company-specific risk be diversified away by investing in both ZhongAn Online and Deluxe 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 Deluxe 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 Deluxe, you can compare the effects of market volatilities on ZhongAn Online and Deluxe 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 Deluxe. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZhongAn Online and Deluxe.

Diversification Opportunities for ZhongAn Online and Deluxe

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between ZhongAn and Deluxe is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding ZhongAn Online P and Deluxe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deluxe 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 Deluxe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deluxe has no effect on the direction of ZhongAn Online i.e., ZhongAn Online and Deluxe go up and down completely randomly.

Pair Corralation between ZhongAn Online and Deluxe

Assuming the 90 days horizon ZhongAn Online P is expected to under-perform the Deluxe. In addition to that, ZhongAn Online is 1.38 times more volatile than Deluxe. It trades about -0.05 of its total potential returns per unit of risk. Deluxe is currently generating about 0.04 per unit of volatility. If you would invest  1,727  in Deluxe on November 2, 2024 and sell it today you would earn a total of  640.00  from holding Deluxe or generate 37.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

ZhongAn Online P  vs.  Deluxe

 Performance 
       Timeline  
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 weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Deluxe 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Deluxe are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Deluxe showed solid returns over the last few months and may actually be approaching a breakup point.

ZhongAn Online and Deluxe Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ZhongAn Online and Deluxe

The main advantage of trading using opposite ZhongAn Online and Deluxe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZhongAn Online position performs unexpectedly, Deluxe 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 Deluxe will offset losses from the drop in Deluxe's long position.
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The idea behind ZhongAn Online P and Deluxe 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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