Correlation Between Ping An and COMPUGROUP MEDSPADR

Can any of the company-specific risk be diversified away by investing in both Ping An and COMPUGROUP MEDSPADR 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 COMPUGROUP MEDSPADR 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 COMPUGROUP MEDSPADR 1, you can compare the effects of market volatilities on Ping An and COMPUGROUP MEDSPADR 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 COMPUGROUP MEDSPADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and COMPUGROUP MEDSPADR.

Diversification Opportunities for Ping An and COMPUGROUP MEDSPADR

-0.66

Correlation Coefficient

Ping An  COMPUGROUP MEDSPADR

Excellent diversification

The 3 months correlation between Ping and COMPUGROUP is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Healthcare and COMPUGROUP MEDSPADR 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMPUGROUP MEDSPADR 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 COMPUGROUP MEDSPADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMPUGROUP MEDSPADR has no effect on the direction of Ping An i.e., Ping An and COMPUGROUP MEDSPADR go up and down completely randomly.

Pair Corralation between Ping An and COMPUGROUP MEDSPADR

Assuming the 90 days horizon Ping An Healthcare is expected to under-perform the COMPUGROUP MEDSPADR. But the stock apears to be less risky and, when comparing its historical volatility, Ping An Healthcare is 1.21 times less risky than COMPUGROUP MEDSPADR. The stock trades about -0.03 of its potential returns per unit of risk. The COMPUGROUP MEDSPADR 1 is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,243  in COMPUGROUP MEDSPADR 1 on September 24, 2024 and sell it today you would lose (1,163) from holding COMPUGROUP MEDSPADR 1 or give up 35.86% of portfolio value over 90 days.

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

Ping An Healthcare  vs.  COMPUGROUP MEDSPADR 1

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.

COMPUGROUP MEDSPADR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COMPUGROUP MEDSPADR 1 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COMPUGROUP MEDSPADR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ping An and COMPUGROUP MEDSPADR

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

The idea behind Ping An Healthcare and COMPUGROUP MEDSPADR 1 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..