Correlation Between ZhongAn Online and Grand Canyon

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

Diversification Opportunities for ZhongAn Online and Grand Canyon

0.51

Correlation Coefficient

ZhongAn Online  Grand Canyon

Very weak diversification

The 3 months correlation between ZhongAn and Grand is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding ZhongAn Online P and Grand Canyon Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Canyon Education 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 Grand Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Canyon Education has no effect on the direction of ZhongAn Online i.e., ZhongAn Online and Grand Canyon go up and down completely randomly.

Pair Corralation between ZhongAn Online and Grand Canyon

Assuming the 90 days trading horizon ZhongAn Online P is expected to generate 2.7 times more return on investment than Grand Canyon. However, ZhongAn Online is 2.7 times more volatile than Grand Canyon Education. It trades about 0.06 of its potential returns per unit of risk. Grand Canyon Education is currently generating about -0.01 per unit of risk. If you would invest  143.00  in ZhongAn Online P on December 22, 2024 and sell it today you would earn a total of  15.00  from holding ZhongAn Online P or generate 10.49% return on investment over 90 days.

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

ZhongAn Online P  vs.  Grand Canyon Education

ZhongAn Online P

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ZhongAn Online P are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, ZhongAn Online unveiled solid returns over the last few months and may actually be approaching a breakup point.

Grand Canyon Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grand Canyon Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Grand Canyon 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 Grand Canyon

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

The idea behind ZhongAn Online P and Grand Canyon Education 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.