Correlation Between Ping An and Evolent Health

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

Diversification Opportunities for Ping An and Evolent Health

0.12

Correlation Coefficient

Ping An  Evolent Health

Average diversification

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

Pair Corralation between Ping An and Evolent Health

Assuming the 90 days horizon Ping An Healthcare is expected to under-perform the Evolent Health. In addition to that, Ping An is 3.44 times more volatile than Evolent Health. It trades about -0.19 of its total potential returns per unit of risk. Evolent Health is currently generating about 0.02 per unit of volatility. If you would invest  1,070  in Evolent Health on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Evolent Health or generate 0.0% 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.  Evolent Health

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Evolent Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolent Health 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ping An and Evolent Health

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

The idea behind Ping An Healthcare and Evolent Health 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.