Correlation Between GENERAL and ZhongAn Online

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

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

Diversification Opportunities for GENERAL and ZhongAn Online

0.28

Correlation Coefficient

GENERAL  ZhongAn Online

Modest diversification

The 3 months correlation between GENERAL and ZhongAn is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding GENERAL ELEC CAP 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 GENERAL 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 GENERAL ELEC CAP 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 GENERAL i.e., GENERAL and ZhongAn Online go up and down completely randomly.

Pair Corralation between GENERAL and ZhongAn Online

Assuming the 90 days trading horizon GENERAL ELEC CAP is expected to generate 0.54 times more return on investment than ZhongAn Online. However, GENERAL ELEC CAP is 1.86 times less risky than ZhongAn Online. It trades about 0.01 of its potential returns per unit of risk. ZhongAn Online P is currently generating about -0.05 per unit of risk. If you would invest  8,962  in GENERAL ELEC CAP on October 11, 2024 and sell it today you would earn a total of  138.00  from holding GENERAL ELEC CAP or generate 1.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	39.31%
Values	Daily Returns

GENERAL ELEC CAP  vs.  ZhongAn Online P

GENERAL ELEC CAP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GENERAL ELEC CAP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat 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 GENERAL ELEC CAP 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 GENERAL and ZhongAn Online

The main advantage of trading using opposite GENERAL and ZhongAn Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GENERAL 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 GENERAL ELEC CAP 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.