Correlation Between Shenzhen Mindray and Ping An

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

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

Diversification Opportunities for Shenzhen Mindray and Ping An

0.88

Correlation Coefficient

Shenzhen Mindray  Ping An

Very poor diversification

The 3 months correlation between Shenzhen and Ping is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Mindray Bio Medical 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 Shenzhen Mindray 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 Shenzhen Mindray Bio Medical 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 Shenzhen Mindray i.e., Shenzhen Mindray and Ping An go up and down completely randomly.

Pair Corralation between Shenzhen Mindray and Ping An

Assuming the 90 days trading horizon Shenzhen Mindray Bio Medical is expected to under-perform the Ping An. In addition to that, Shenzhen Mindray is 1.07 times more volatile than Ping An Insurance. It trades about -0.01 of its total potential returns per unit of risk. Ping An Insurance is currently generating about 0.03 per unit of volatility. If you would invest  4,573  in Ping An Insurance on September 24, 2024 and sell it today you would earn a total of  689.00  from holding Ping An Insurance or generate 15.07% return on investment over 90 days.

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

Shenzhen Mindray Bio Medical  vs.  Ping An Insurance

Shenzhen Mindray Bio

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Mindray Bio Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Mindray may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ping An Insurance

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ping An sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenzhen Mindray and Ping An

The main advantage of trading using opposite Shenzhen Mindray and Ping An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Mindray 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 Shenzhen Mindray Bio Medical 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.