Correlation Between ZhongAn Online and BNP Paribas

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

Diversification Opportunities for ZhongAn Online and BNP Paribas

0.37

Correlation Coefficient

ZhongAn Online  BNP Paribas

Weak diversification

The 3 months correlation between ZhongAn and BNP is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding ZhongAn Online P and BNP Paribas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas SA 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 BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas SA has no effect on the direction of ZhongAn Online i.e., ZhongAn Online and BNP Paribas go up and down completely randomly.

Pair Corralation between ZhongAn Online and BNP Paribas

Assuming the 90 days trading horizon ZhongAn Online P is expected to under-perform the BNP Paribas. In addition to that, ZhongAn Online is 2.13 times more volatile than BNP Paribas SA. It trades about -0.14 of its total potential returns per unit of risk. BNP Paribas SA is currently generating about -0.03 per unit of volatility. If you would invest  6,207  in BNP Paribas SA on October 9, 2024 and sell it today you would lose (169.00) from holding BNP Paribas SA or give up 2.72% 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.  BNP Paribas SA

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 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.

BNP Paribas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNP Paribas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BNP Paribas is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ZhongAn Online and BNP Paribas

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

The idea behind ZhongAn Online P and BNP Paribas SA 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.