Correlation Between Heilongjiang Transport and Peoples Insurance

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

By analyzing existing cross correlation between Heilongjiang Transport Development and Peoples Insurance of, you can compare the effects of market volatilities on Heilongjiang Transport and Peoples Insurance 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 Heilongjiang Transport with a short position of Peoples Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heilongjiang Transport and Peoples Insurance.

Diversification Opportunities for Heilongjiang Transport and Peoples Insurance

0.73

Correlation Coefficient

Heilongjiang Transport  Peoples Insurance

Poor diversification

The 3 months correlation between Heilongjiang and Peoples is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Heilongjiang Transport Develop and Peoples Insurance of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Insurance and Heilongjiang Transport 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 Heilongjiang Transport Development are associated (or correlated) with Peoples Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Insurance has no effect on the direction of Heilongjiang Transport i.e., Heilongjiang Transport and Peoples Insurance go up and down completely randomly.

Pair Corralation between Heilongjiang Transport and Peoples Insurance

Assuming the 90 days trading horizon Heilongjiang Transport Development is expected to under-perform the Peoples Insurance. In addition to that, Heilongjiang Transport is 2.16 times more volatile than Peoples Insurance of. It trades about -0.04 of its total potential returns per unit of risk. Peoples Insurance of is currently generating about 0.18 per unit of volatility. If you would invest  725.00  in Peoples Insurance of on September 28, 2024 and sell it today you would earn a total of  40.00  from holding Peoples Insurance of or generate 5.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Heilongjiang Transport Develop  vs.  Peoples Insurance of

Heilongjiang Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heilongjiang Transport Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Heilongjiang Transport is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Peoples Insurance

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Peoples Insurance of are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Peoples Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Heilongjiang Transport and Peoples Insurance

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

The idea behind Heilongjiang Transport Development and Peoples Insurance of 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.