Correlation Between ZhongAn Online and BANK RAKYAT

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

Diversification Opportunities for ZhongAn Online and BANK RAKYAT

0.69

Correlation Coefficient

ZhongAn Online  BANK RAKYAT

Poor diversification

The 3 months correlation between ZhongAn and BANK is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding ZhongAn Online P and BANK RAKYAT IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK RAKYAT IND 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 BANK RAKYAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK RAKYAT IND has no effect on the direction of ZhongAn Online i.e., ZhongAn Online and BANK RAKYAT go up and down completely randomly.

Pair Corralation between ZhongAn Online and BANK RAKYAT

Assuming the 90 days trading horizon ZhongAn Online P is expected to generate 1.13 times more return on investment than BANK RAKYAT. However, ZhongAn Online is 1.13 times more volatile than BANK RAKYAT IND. It trades about -0.07 of its potential returns per unit of risk. BANK RAKYAT IND is currently generating about -0.09 per unit of risk. If you would invest  160.00  in ZhongAn Online P on October 24, 2024 and sell it today you would lose (21.00) from holding ZhongAn Online P or give up 13.12% of portfolio value over 90 days.

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

ZhongAn Online P  vs.  BANK RAKYAT IND

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 latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

BANK RAKYAT IND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK RAKYAT IND 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with ZhongAn Online and BANK RAKYAT

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

The idea behind ZhongAn Online P and BANK RAKYAT IND 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.