Correlation Between SCIENCE IN and ZhongAn Online

Can any of the company-specific risk be diversified away by investing in both SCIENCE IN and ZhongAn Online 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 SCIENCE IN and ZhongAn Online into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SCIENCE IN SPORT and ZhongAn Online P, you can compare the effects of market volatilities on SCIENCE IN and ZhongAn Online 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 SCIENCE IN with a short position of ZhongAn Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCIENCE IN and ZhongAn Online.

Diversification Opportunities for SCIENCE IN and ZhongAn Online

0.53

Correlation Coefficient

SCIENCE IN  ZhongAn Online

Very weak diversification

The 3 months correlation between SCIENCE and ZhongAn is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding SCIENCE IN SPORT and ZhongAn Online P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZhongAn Online P and SCIENCE IN 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 SCIENCE IN SPORT are associated (or correlated) with ZhongAn Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZhongAn Online P has no effect on the direction of SCIENCE IN i.e., SCIENCE IN and ZhongAn Online go up and down completely randomly.

Pair Corralation between SCIENCE IN and ZhongAn Online

Assuming the 90 days horizon SCIENCE IN SPORT is expected to under-perform the ZhongAn Online. But the stock apears to be less risky and, when comparing its historical volatility, SCIENCE IN SPORT is 1.45 times less risky than ZhongAn Online. The stock trades about -0.02 of its potential returns per unit of risk. The ZhongAn Online P is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  143.00  in ZhongAn Online P on December 22, 2024 and sell it today you would earn a total of  9.00  from holding ZhongAn Online P or generate 6.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

SCIENCE IN SPORT  vs.  ZhongAn Online P

SCIENCE IN SPORT

Risk-Adjusted Performance

Very Weak

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

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 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ZhongAn Online may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SCIENCE IN and ZhongAn Online

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

The idea behind SCIENCE IN SPORT and ZhongAn Online P 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.