Correlation Between Ping An and Jointo Energy

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

Diversification Opportunities for Ping An and Jointo Energy

-0.19

Correlation Coefficient

Ping An  Jointo Energy

Good diversification

The 3 months correlation between Ping and Jointo is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Jointo Energy Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jointo Energy Investment 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 Jointo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jointo Energy Investment has no effect on the direction of Ping An i.e., Ping An and Jointo Energy go up and down completely randomly.

Pair Corralation between Ping An and Jointo Energy

Assuming the 90 days trading horizon Ping An Insurance is expected to generate 0.74 times more return on investment than Jointo Energy. However, Ping An Insurance is 1.36 times less risky than Jointo Energy. It trades about 0.07 of its potential returns per unit of risk. Jointo Energy Investment is currently generating about 0.02 per unit of risk. If you would invest  3,782  in Ping An Insurance on October 6, 2024 and sell it today you would earn a total of  1,248  from holding Ping An Insurance or generate 33.0% return on investment over 90 days.

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

Ping An Insurance  vs.  Jointo Energy Investment

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.

Jointo Energy Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ping An and Jointo Energy

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

The idea behind Ping An Insurance and Jointo Energy Investment 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.