Correlation Between EAGLE and ZhongAn Online

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

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

Diversification Opportunities for EAGLE and ZhongAn Online

-0.17

Correlation Coefficient

EAGLE  ZhongAn Online

Good diversification

The 3 months correlation between EAGLE and ZhongAn is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS 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 EAGLE 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 EAGLE MATERIALS 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 EAGLE i.e., EAGLE and ZhongAn Online go up and down completely randomly.

Pair Corralation between EAGLE and ZhongAn Online

Assuming the 90 days trading horizon EAGLE MATERIALS INC is expected to generate 0.16 times more return on investment than ZhongAn Online. However, EAGLE MATERIALS INC is 6.15 times less risky than ZhongAn Online. It trades about -0.03 of its potential returns per unit of risk. ZhongAn Online P is currently generating about -0.13 per unit of risk. If you would invest  8,506  in EAGLE MATERIALS INC on December 24, 2024 and sell it today you would lose (108.00) from holding EAGLE MATERIALS INC or give up 1.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

EAGLE MATERIALS INC  vs.  ZhongAn Online P

EAGLE MATERIALS INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days EAGLE MATERIALS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EAGLE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

ZhongAn Online P

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with EAGLE and ZhongAn Online

The main advantage of trading using opposite EAGLE and ZhongAn Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE 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 EAGLE MATERIALS 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.