Correlation Between Ping An and Sieyuan Electric

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

Diversification Opportunities for Ping An and Sieyuan Electric

0.38

Correlation Coefficient

Ping An  Sieyuan Electric

Weak diversification

The 3 months correlation between Ping and Sieyuan is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Sieyuan Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sieyuan Electric 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 Sieyuan Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sieyuan Electric has no effect on the direction of Ping An i.e., Ping An and Sieyuan Electric go up and down completely randomly.

Pair Corralation between Ping An and Sieyuan Electric

Assuming the 90 days trading horizon Ping An Insurance is expected to under-perform the Sieyuan Electric. In addition to that, Ping An is 1.11 times more volatile than Sieyuan Electric Co. It trades about -0.17 of its total potential returns per unit of risk. Sieyuan Electric Co is currently generating about -0.16 per unit of volatility. If you would invest  7,941  in Sieyuan Electric Co on October 7, 2024 and sell it today you would lose (851.00) from holding Sieyuan Electric Co or give up 10.72% of portfolio value over 90 days.

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

Ping An Insurance  vs.  Sieyuan Electric Co

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.

Sieyuan Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sieyuan Electric Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sieyuan Electric 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 Sieyuan Electric

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

The idea behind Ping An Insurance and Sieyuan Electric Co 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.