Correlation Between Anhui Shiny and Ping An

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

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

Diversification Opportunities for Anhui Shiny and Ping An

-0.09

Correlation Coefficient

Anhui Shiny  Ping An

Good diversification

The 3 months correlation between Anhui and Ping is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Shiny Electronic 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 Anhui Shiny 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 Anhui Shiny Electronic 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 Anhui Shiny i.e., Anhui Shiny and Ping An go up and down completely randomly.

Pair Corralation between Anhui Shiny and Ping An

Assuming the 90 days trading horizon Anhui Shiny Electronic is expected to generate 2.11 times more return on investment than Ping An. However, Anhui Shiny is 2.11 times more volatile than Ping An Insurance. It trades about 0.09 of its potential returns per unit of risk. Ping An Insurance is currently generating about -0.08 per unit of risk. If you would invest  1,764  in Anhui Shiny Electronic on October 9, 2024 and sell it today you would earn a total of  346.00  from holding Anhui Shiny Electronic or generate 19.61% return on investment over 90 days.

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

Anhui Shiny Electronic  vs.  Ping An Insurance

Anhui Shiny Electronic

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Shiny Electronic are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Shiny sustained solid returns over the last few months and may actually be approaching a breakup point.

Ping An Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ping An Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Anhui Shiny and Ping An

The main advantage of trading using opposite Anhui Shiny and Ping An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anhui Shiny 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 Anhui Shiny Electronic 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.