Correlation Between Ping An and Zoomlion Heavy

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

By analyzing existing cross correlation between Ping An Insurance and Zoomlion Heavy Industry, you can compare the effects of market volatilities on Ping An and Zoomlion Heavy 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 Zoomlion Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and Zoomlion Heavy.

Diversification Opportunities for Ping An and Zoomlion Heavy

0.3

Correlation Coefficient

Ping An  Zoomlion Heavy

Weak diversification

The 3 months correlation between Ping and Zoomlion is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Zoomlion Heavy Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoomlion Heavy Industry 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 Insurance are associated (or correlated) with Zoomlion Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoomlion Heavy Industry has no effect on the direction of Ping An i.e., Ping An and Zoomlion Heavy go up and down completely randomly.

Pair Corralation between Ping An and Zoomlion Heavy

Assuming the 90 days trading horizon Ping An Insurance is expected to under-perform the Zoomlion Heavy. In addition to that, Ping An is 1.02 times more volatile than Zoomlion Heavy Industry. It trades about -0.2 of its total potential returns per unit of risk. Zoomlion Heavy Industry is currently generating about 0.03 per unit of volatility. If you would invest  697.00  in Zoomlion Heavy Industry on October 5, 2024 and sell it today you would earn a total of  5.00  from holding Zoomlion Heavy Industry or generate 0.72% return on investment over 90 days.

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

Ping An Insurance  vs.  Zoomlion Heavy Industry

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Zoomlion Heavy Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zoomlion Heavy Industry 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 Ping An and Zoomlion Heavy

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

The idea behind Ping An Insurance and Zoomlion Heavy Industry 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.