Correlation Between Ping An and Henan Shuanghui

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

Diversification Opportunities for Ping An and Henan Shuanghui

0.91

Correlation Coefficient

Ping An  Henan Shuanghui

Almost no diversification

The 3 months correlation between Ping and Henan is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Henan Shuanghui Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henan Shuanghui Inve 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 Henan Shuanghui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henan Shuanghui Inve has no effect on the direction of Ping An i.e., Ping An and Henan Shuanghui go up and down completely randomly.

Pair Corralation between Ping An and Henan Shuanghui

Assuming the 90 days trading horizon Ping An Insurance is expected to under-perform the Henan Shuanghui. In addition to that, Ping An is 1.88 times more volatile than Henan Shuanghui Investment. It trades about -0.1 of its total potential returns per unit of risk. Henan Shuanghui Investment is currently generating about -0.06 per unit of volatility. If you would invest  2,488  in Henan Shuanghui Investment on September 1, 2024 and sell it today you would lose (37.00) from holding Henan Shuanghui Investment or give up 1.49% of portfolio value over 90 days.

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

Ping An Insurance  vs.  Henan Shuanghui Investment

Ping An Insurance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 10 (%) 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.

Henan Shuanghui Inve

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Henan Shuanghui Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Henan Shuanghui may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Ping An and Henan Shuanghui

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

The idea behind Ping An Insurance and Henan Shuanghui 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..