Correlation Between Direct Line and ZEEKR Intelligent

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

By analyzing existing cross correlation between Direct Line Insurance and ZEEKR Intelligent Technology, you can compare the effects of market volatilities on Direct Line and ZEEKR Intelligent 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 Direct Line with a short position of ZEEKR Intelligent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Line and ZEEKR Intelligent.

Diversification Opportunities for Direct Line and ZEEKR Intelligent

0.59

Correlation Coefficient

Direct Line  ZEEKR Intelligent

Very weak diversification

The 3 months correlation between Direct and ZEEKR is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Direct Line Insurance and ZEEKR Intelligent Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZEEKR Intelligent and Direct Line 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 Direct Line Insurance are associated (or correlated) with ZEEKR Intelligent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZEEKR Intelligent has no effect on the direction of Direct Line i.e., Direct Line and ZEEKR Intelligent go up and down completely randomly.

Pair Corralation between Direct Line and ZEEKR Intelligent

Assuming the 90 days horizon Direct Line Insurance is expected to generate 0.75 times more return on investment than ZEEKR Intelligent. However, Direct Line Insurance is 1.33 times less risky than ZEEKR Intelligent. It trades about 0.2 of its potential returns per unit of risk. ZEEKR Intelligent Technology is currently generating about 0.08 per unit of risk. If you would invest  864.00  in Direct Line Insurance on October 7, 2024 and sell it today you would earn a total of  404.00  from holding Direct Line Insurance or generate 46.76% return on investment over 90 days.

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

Direct Line Insurance  vs.  ZEEKR Intelligent Technology

Direct Line Insurance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Direct Line Insurance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Direct Line showed solid returns over the last few months and may actually be approaching a breakup point.

ZEEKR Intelligent

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZEEKR Intelligent Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, ZEEKR Intelligent disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Direct Line and ZEEKR Intelligent

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

The idea behind Direct Line Insurance and ZEEKR Intelligent Technology 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.