Correlation Between ZhongAn Online and Valeura Energy

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

Diversification Opportunities for ZhongAn Online and Valeura Energy

-0.55

Correlation Coefficient

ZhongAn Online  Valeura Energy

Excellent diversification

The 3 months correlation between ZhongAn and Valeura is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding ZhongAn Online P and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura Energy 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 Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of ZhongAn Online i.e., ZhongAn Online and Valeura Energy go up and down completely randomly.

Pair Corralation between ZhongAn Online and Valeura Energy

Assuming the 90 days horizon ZhongAn Online P is expected to under-perform the Valeura Energy. In addition to that, ZhongAn Online is 2.23 times more volatile than Valeura Energy. It trades about -0.22 of its total potential returns per unit of risk. Valeura Energy is currently generating about 0.06 per unit of volatility. If you would invest  491.00  in Valeura Energy on October 12, 2024 and sell it today you would earn a total of  13.00  from holding Valeura Energy or generate 2.65% return on investment over 90 days.

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

ZhongAn Online P  vs.  Valeura Energy

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.

Valeura Energy

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Valeura Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZhongAn Online and Valeura Energy

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

The idea behind ZhongAn Online P and Valeura Energy 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 Stocks Directory module to find actively traded stocks across global markets.