Correlation Between United Insurance and Ping An

Can any of the company-specific risk be diversified away by investing in both United Insurance and Ping An 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 United Insurance and Ping An into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United Insurance Holdings and Ping An Insurance, you can compare the effects of market volatilities on United Insurance and Ping An 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 United Insurance with a short position of Ping An. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Ping An.

Diversification Opportunities for United Insurance and Ping An

0.16

Correlation Coefficient

United Insurance  Ping An

Average diversification

The 3 months correlation between United and Ping is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Ping An Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ping An Insurance and United Insurance 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 United Insurance Holdings are associated (or correlated) with Ping An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ping An Insurance has no effect on the direction of United Insurance i.e., United Insurance and Ping An go up and down completely randomly.

Pair Corralation between United Insurance and Ping An

Assuming the 90 days horizon United Insurance is expected to generate 1.14 times less return on investment than Ping An. In addition to that, United Insurance is 1.01 times more volatile than Ping An Insurance. It trades about 0.14 of its total potential returns per unit of risk. Ping An Insurance is currently generating about 0.16 per unit of volatility. If you would invest  401.00  in Ping An Insurance on September 12, 2024 and sell it today you would earn a total of  180.00  from holding Ping An Insurance or generate 44.89% return on investment over 90 days.

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

United Insurance Holdings  vs.  Ping An Insurance

United Insurance Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Insurance Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Ping An Insurance

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ping An unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Insurance and Ping An

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

The idea behind United Insurance Holdings and Ping An Insurance 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.