Correlation Between Ping An and Gaming

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

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

Diversification Opportunities for Ping An and Gaming

0.12

Correlation Coefficient

Ping An  Gaming

Average diversification

The 3 months correlation between Ping and Gaming is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Healthcare and Gaming and Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming and Leisure and Ping An 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 Ping An Healthcare are associated (or correlated) with Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming and Leisure has no effect on the direction of Ping An i.e., Ping An and Gaming go up and down completely randomly.

Pair Corralation between Ping An and Gaming

Assuming the 90 days horizon Ping An Healthcare is expected to under-perform the Gaming. In addition to that, Ping An is 9.58 times more volatile than Gaming and Leisure. It trades about -0.11 of its total potential returns per unit of risk. Gaming and Leisure is currently generating about 0.01 per unit of volatility. If you would invest  4,551  in Gaming and Leisure on October 11, 2024 and sell it today you would earn a total of  6.00  from holding Gaming and Leisure or generate 0.13% return on investment over 90 days.

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

Ping An Healthcare  vs.  Gaming and Leisure

Ping An Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ping An Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Gaming and Leisure

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gaming and Leisure are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gaming is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ping An and Gaming

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

The idea behind Ping An Healthcare and Gaming and Leisure 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.