Correlation Between Lendlease and ZhongAn Online

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

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

Diversification Opportunities for Lendlease and ZhongAn Online

0.6

Correlation Coefficient

Lendlease  ZhongAn Online

Poor diversification

The 3 months correlation between Lendlease and ZhongAn is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group 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 Lendlease 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 Lendlease Group 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 Lendlease i.e., Lendlease and ZhongAn Online go up and down completely randomly.

Pair Corralation between Lendlease and ZhongAn Online

Assuming the 90 days trading horizon Lendlease Group is expected to generate 0.55 times more return on investment than ZhongAn Online. However, Lendlease Group is 1.8 times less risky than ZhongAn Online. It trades about -0.08 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  415.00  in Lendlease Group on October 24, 2024 and sell it today you would lose (35.00) from holding Lendlease Group or give up 8.43% of portfolio value over 90 days.

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

Lendlease Group  vs.  ZhongAn Online P

Lendlease Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lendlease Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private 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 latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Lendlease and ZhongAn Online

The main advantage of trading using opposite Lendlease and ZhongAn Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease 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 Lendlease Group 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.