Correlation Between Progressive Corp and ZhongAn Online

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

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

Diversification Opportunities for Progressive Corp and ZhongAn Online

0.25

Correlation Coefficient

Progressive Corp  ZhongAn Online

Modest diversification

The 3 months correlation between Progressive and ZhongAn is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp 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 Progressive Corp 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 Progressive Corp 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 Progressive Corp i.e., Progressive Corp and ZhongAn Online go up and down completely randomly.

Pair Corralation between Progressive Corp and ZhongAn Online

Considering the 90-day investment horizon Progressive Corp is expected to generate 0.2 times more return on investment than ZhongAn Online. However, Progressive Corp is 4.92 times less risky than ZhongAn Online. It trades about -0.25 of its potential returns per unit of risk. ZhongAn Online P is currently generating about -0.22 per unit of risk. If you would invest  26,129  in Progressive Corp on October 6, 2024 and sell it today you would lose (1,907) from holding Progressive Corp or give up 7.3% of portfolio value over 90 days.

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

Progressive Corp  vs.  ZhongAn Online P

Progressive Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Progressive Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Progressive Corp is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail 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 Progressive Corp and ZhongAn Online

The main advantage of trading using opposite Progressive Corp and ZhongAn Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progressive Corp 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 Progressive Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.