Correlation Between AmTrust Financial and ZhongAn Online

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

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

Diversification Opportunities for AmTrust Financial and ZhongAn Online

-0.24

Correlation Coefficient

AmTrust Financial  ZhongAn Online

Very good diversification

The 3 months correlation between AmTrust and ZhongAn is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services 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 AmTrust Financial 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 AmTrust Financial Services 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 AmTrust Financial i.e., AmTrust Financial and ZhongAn Online go up and down completely randomly.

Pair Corralation between AmTrust Financial and ZhongAn Online

Assuming the 90 days horizon AmTrust Financial Services is expected to generate 0.52 times more return on investment than ZhongAn Online. However, AmTrust Financial Services is 1.92 times less risky than ZhongAn Online. It trades about 0.03 of its potential returns per unit of risk. ZhongAn Online P is currently generating about -0.04 per unit of risk. If you would invest  1,143  in AmTrust Financial Services on October 5, 2024 and sell it today you would earn a total of  166.00  from holding AmTrust Financial Services or generate 14.52% return on investment over 90 days.

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

AmTrust Financial Services  vs.  ZhongAn Online P

AmTrust Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AmTrust Financial Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, AmTrust Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with AmTrust Financial and ZhongAn Online

The main advantage of trading using opposite AmTrust Financial and ZhongAn Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmTrust Financial 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 AmTrust Financial Services 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.