Correlation Between Ping An and Renrenle Commercial

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

Diversification Opportunities for Ping An and Renrenle Commercial

-0.59

Correlation Coefficient

Ping An  Renrenle Commercial

Excellent diversification

The 3 months correlation between Ping and Renrenle is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Renrenle Commercial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renrenle Commercial 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 Renrenle Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renrenle Commercial has no effect on the direction of Ping An i.e., Ping An and Renrenle Commercial go up and down completely randomly.

Pair Corralation between Ping An and Renrenle Commercial

Assuming the 90 days trading horizon Ping An Insurance is expected to under-perform the Renrenle Commercial. But the stock apears to be less risky and, when comparing its historical volatility, Ping An Insurance is 1.77 times less risky than Renrenle Commercial. The stock trades about -0.14 of its potential returns per unit of risk. The Renrenle Commercial Group is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  304.00  in Renrenle Commercial Group on October 7, 2024 and sell it today you would earn a total of  295.00  from holding Renrenle Commercial Group or generate 97.04% return on investment over 90 days.

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

Ping An Insurance  vs.  Renrenle Commercial Group

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.

Renrenle Commercial

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Renrenle Commercial Group are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Renrenle Commercial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ping An and Renrenle Commercial

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

The idea behind Ping An Insurance and Renrenle Commercial Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..