Correlation Between Zhibao Technology and Erie Indemnity

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

By analyzing existing cross correlation between Zhibao Technology Class and Erie Indemnity, you can compare the effects of market volatilities on Zhibao Technology and Erie Indemnity 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 Zhibao Technology with a short position of Erie Indemnity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhibao Technology and Erie Indemnity.

Diversification Opportunities for Zhibao Technology and Erie Indemnity

0.64

Correlation Coefficient

Zhibao Technology  Erie Indemnity

Poor diversification

The 3 months correlation between Zhibao and Erie is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Zhibao Technology Class and Erie Indemnity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erie Indemnity and Zhibao Technology 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 Zhibao Technology Class are associated (or correlated) with Erie Indemnity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erie Indemnity has no effect on the direction of Zhibao Technology i.e., Zhibao Technology and Erie Indemnity go up and down completely randomly.

Pair Corralation between Zhibao Technology and Erie Indemnity

Given the investment horizon of 90 days Zhibao Technology Class is expected to under-perform the Erie Indemnity. In addition to that, Zhibao Technology is 3.11 times more volatile than Erie Indemnity. It trades about -0.07 of its total potential returns per unit of risk. Erie Indemnity is currently generating about 0.22 per unit of volatility. If you would invest  40,361  in Erie Indemnity on December 4, 2024 and sell it today you would earn a total of  4,120  from holding Erie Indemnity or generate 10.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Zhibao Technology Class  vs.  Erie Indemnity

Zhibao Technology Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zhibao Technology Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Erie Indemnity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Erie Indemnity are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Erie Indemnity is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Zhibao Technology and Erie Indemnity

The main advantage of trading using opposite Zhibao Technology and Erie Indemnity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhibao Technology position performs unexpectedly, Erie Indemnity 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 Erie Indemnity will offset losses from the drop in Erie Indemnity's long position.

The idea behind Zhibao Technology Class and Erie Indemnity 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.