Correlation Between PENINSULA ENERG and ZhongAn Online

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

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

Diversification Opportunities for PENINSULA ENERG and ZhongAn Online

0.5

Correlation Coefficient

PENINSULA ENERG  ZhongAn Online

Very weak diversification

The 3 months correlation between PENINSULA and ZhongAn is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding PENINSULA ENERG 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 PENINSULA ENERG 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 PENINSULA ENERG 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 PENINSULA ENERG i.e., PENINSULA ENERG and ZhongAn Online go up and down completely randomly.

Pair Corralation between PENINSULA ENERG and ZhongAn Online

Assuming the 90 days trading horizon PENINSULA ENERG is expected to generate 12.89 times more return on investment than ZhongAn Online. However, PENINSULA ENERG is 12.89 times more volatile than ZhongAn Online P. It trades about 0.04 of its potential returns per unit of risk. ZhongAn Online P is currently generating about -0.03 per unit of risk. If you would invest  185.00  in PENINSULA ENERG on October 4, 2024 and sell it today you would lose (106.00) from holding PENINSULA ENERG or give up 57.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

PENINSULA ENERG  vs.  ZhongAn Online P

PENINSULA ENERG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PENINSULA ENERG 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 February 2025. The newest uproar may also be a sign of mid-term up-swing 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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with PENINSULA ENERG and ZhongAn Online

The main advantage of trading using opposite PENINSULA ENERG and ZhongAn Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENINSULA ENERG 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 PENINSULA ENERG 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.