Correlation Between ZhongAn Online and Axalta Coating

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

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

Diversification Opportunities for ZhongAn Online and Axalta Coating

0.31

Correlation Coefficient

ZhongAn Online  Axalta Coating

Weak diversification

The 3 months correlation between ZhongAn and Axalta is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding ZhongAn Online P and Axalta Coating Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axalta Coating Systems and ZhongAn Online 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 ZhongAn Online P are associated (or correlated) with Axalta Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axalta Coating Systems has no effect on the direction of ZhongAn Online i.e., ZhongAn Online and Axalta Coating go up and down completely randomly.

Pair Corralation between ZhongAn Online and Axalta Coating

Assuming the 90 days horizon ZhongAn Online P is expected to under-perform the Axalta Coating. In addition to that, ZhongAn Online is 1.95 times more volatile than Axalta Coating Systems. It trades about -0.05 of its total potential returns per unit of risk. Axalta Coating Systems is currently generating about 0.04 per unit of volatility. If you would invest  2,740  in Axalta Coating Systems on October 11, 2024 and sell it today you would earn a total of  690.00  from holding Axalta Coating Systems or generate 25.18% return on investment over 90 days.

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

ZhongAn Online P  vs.  Axalta Coating Systems

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.

Axalta Coating Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axalta Coating Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with ZhongAn Online and Axalta Coating

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

The idea behind ZhongAn Online P and Axalta Coating Systems 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.