Correlation Between ZhongAn Online and National CineMedia

Can any of the company-specific risk be diversified away by investing in both ZhongAn Online and National CineMedia 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 National CineMedia 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 National CineMedia, you can compare the effects of market volatilities on ZhongAn Online and National CineMedia 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 National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZhongAn Online and National CineMedia.

Diversification Opportunities for ZhongAn Online and National CineMedia

0.32

Correlation Coefficient

ZhongAn Online  National CineMedia

Weak diversification

The 3 months correlation between ZhongAn and National is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding ZhongAn Online P and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia 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 National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of ZhongAn Online i.e., ZhongAn Online and National CineMedia go up and down completely randomly.

Pair Corralation between ZhongAn Online and National CineMedia

Assuming the 90 days horizon ZhongAn Online P is expected to under-perform the National CineMedia. In addition to that, ZhongAn Online is 1.22 times more volatile than National CineMedia. It trades about -0.13 of its total potential returns per unit of risk. National CineMedia is currently generating about -0.03 per unit of volatility. If you would invest  672.00  in National CineMedia on December 20, 2024 and sell it today you would lose (64.00) from holding National CineMedia or give up 9.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

ZhongAn Online P  vs.  National CineMedia

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.

National CineMedia

Risk-Adjusted Performance

Very Weak

Over the last 90 days National CineMedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with ZhongAn Online and National CineMedia

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

The idea behind ZhongAn Online P and National CineMedia 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.