Correlation Between ZhongAn Online and CCL Industries

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

Diversification Opportunities for ZhongAn Online and CCL Industries

0.21

Correlation Coefficient

ZhongAn Online  CCL Industries

Modest diversification

The 3 months correlation between ZhongAn and CCL is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ZhongAn Online P and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries 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 CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of ZhongAn Online i.e., ZhongAn Online and CCL Industries go up and down completely randomly.

Pair Corralation between ZhongAn Online and CCL Industries

Assuming the 90 days trading horizon ZhongAn Online P is expected to under-perform the CCL Industries. In addition to that, ZhongAn Online is 3.12 times more volatile than CCL Industries. It trades about -0.2 of its total potential returns per unit of risk. CCL Industries is currently generating about -0.07 per unit of volatility. If you would invest  5,269  in CCL Industries on October 6, 2024 and sell it today you would lose (309.00) from holding CCL Industries or give up 5.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ZhongAn Online P  vs.  CCL Industries

ZhongAn Online P

Risk-Adjusted Performance

0 of 100

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 uncertain 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.

CCL Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CCL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CCL Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ZhongAn Online and CCL Industries

The main advantage of trading using opposite ZhongAn Online and CCL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZhongAn Online position performs unexpectedly, CCL Industries 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 CCL Industries will offset losses from the drop in CCL Industries' long position.

The idea behind ZhongAn Online P and CCL Industries 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.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.