Correlation Between ZhongAn Online and DOCDATA

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

Diversification Opportunities for ZhongAn Online and DOCDATA

0.67

Correlation Coefficient

ZhongAn Online  DOCDATA

Poor diversification

The 3 months correlation between ZhongAn and DOCDATA is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ZhongAn Online P and DOCDATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOCDATA 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 DOCDATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOCDATA has no effect on the direction of ZhongAn Online i.e., ZhongAn Online and DOCDATA go up and down completely randomly.

Pair Corralation between ZhongAn Online and DOCDATA

Assuming the 90 days trading horizon ZhongAn Online P is expected to under-perform the DOCDATA. In addition to that, ZhongAn Online is 1.31 times more volatile than DOCDATA. It trades about -0.11 of its total potential returns per unit of risk. DOCDATA is currently generating about -0.09 per unit of volatility. If you would invest  50.00  in DOCDATA on October 4, 2024 and sell it today you would lose (10.00) from holding DOCDATA or give up 20.0% 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.  DOCDATA

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.

DOCDATA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DOCDATA 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 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 DOCDATA

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

The idea behind ZhongAn Online P and DOCDATA 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .