Correlation Between Apple and ZhongAn Online

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

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

Diversification Opportunities for Apple and ZhongAn Online

-0.46

Correlation Coefficient

Apple  ZhongAn Online

Very good diversification

The 3 months correlation between Apple and ZhongAn is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and ZhongAn Online go up and down completely randomly.

Pair Corralation between Apple and ZhongAn Online

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.25 times more return on investment than ZhongAn Online. However, Apple Inc is 4.03 times less risky than ZhongAn Online. It trades about 0.5 of its potential returns per unit of risk. ZhongAn Online P is currently generating about -0.07 per unit of risk. If you would invest  22,810  in Apple Inc on October 1, 2024 and sell it today you would earn a total of  1,685  from holding Apple Inc or generate 7.39% return on investment over 90 days.

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

Apple Inc  vs.  ZhongAn Online P

Apple Inc

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Apple and ZhongAn Online

The main advantage of trading using opposite Apple and ZhongAn Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.