Correlation Between Star Diamond and ZhongAn Online

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

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

Diversification Opportunities for Star Diamond and ZhongAn Online

-0.34

Correlation Coefficient

Star Diamond  ZhongAn Online

Very good diversification

The 3 months correlation between Star and ZhongAn is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Star Diamond 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 Star Diamond 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 Star Diamond 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 Star Diamond i.e., Star Diamond and ZhongAn Online go up and down completely randomly.

Pair Corralation between Star Diamond and ZhongAn Online

Assuming the 90 days horizon Star Diamond is expected to generate 6.24 times less return on investment than ZhongAn Online. In addition to that, Star Diamond is 1.22 times more volatile than ZhongAn Online P. It trades about 0.02 of its total potential returns per unit of risk. ZhongAn Online P is currently generating about 0.16 per unit of volatility. If you would invest  125.00  in ZhongAn Online P on April 23, 2025 and sell it today you would earn a total of  81.00  from holding ZhongAn Online P or generate 64.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Star Diamond  vs.  ZhongAn Online P

Star Diamond

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Star Diamond are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Star Diamond may actually be approaching a critical reversion point that can send shares even higher in August 2025.

ZhongAn Online P

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ZhongAn Online P are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ZhongAn Online reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Star Diamond and ZhongAn Online

The main advantage of trading using opposite Star Diamond and ZhongAn Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Diamond 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 Star Diamond 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.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.