Correlation Between Ping An and Titan Wind

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

Diversification Opportunities for Ping An and Titan Wind

0.87

Correlation Coefficient

Ping An  Titan Wind

Very poor diversification

The 3 months correlation between Ping and Titan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Titan Wind Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Wind Energy 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 Titan Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Wind Energy has no effect on the direction of Ping An i.e., Ping An and Titan Wind go up and down completely randomly.

Pair Corralation between Ping An and Titan Wind

Assuming the 90 days trading horizon Ping An is expected to generate 1.05 times less return on investment than Titan Wind. But when comparing it to its historical volatility, Ping An Insurance is 1.28 times less risky than Titan Wind. It trades about 0.17 of its potential returns per unit of risk. Titan Wind Energy is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  688.00  in Titan Wind Energy on September 12, 2024 and sell it today you would earn a total of  209.00  from holding Titan Wind Energy or generate 30.38% return on investment over 90 days.

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

Ping An Insurance  vs.  Titan Wind Energy

Ping An Insurance

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 13 (%) 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.

Titan Wind Energy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Wind Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Titan Wind sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ping An and Titan Wind

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

The idea behind Ping An Insurance and Titan Wind Energy 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.