Correlation Between Ping An and Chongqing Landai

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

Diversification Opportunities for Ping An and Chongqing Landai

0.07

Correlation Coefficient

Ping An  Chongqing Landai

Significant diversification

The 3 months correlation between Ping and Chongqing is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Chongqing Landai Powertrain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Landai Pow 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 Chongqing Landai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Landai Pow has no effect on the direction of Ping An i.e., Ping An and Chongqing Landai go up and down completely randomly.

Pair Corralation between Ping An and Chongqing Landai

Assuming the 90 days trading horizon Ping An Insurance is expected to under-perform the Chongqing Landai. But the stock apears to be less risky and, when comparing its historical volatility, Ping An Insurance is 3.94 times less risky than Chongqing Landai. The stock trades about -0.08 of its potential returns per unit of risk. The Chongqing Landai Powertrain is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  931.00  in Chongqing Landai Powertrain on December 2, 2024 and sell it today you would earn a total of  284.00  from holding Chongqing Landai Powertrain or generate 30.5% return on investment over 90 days.

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

Ping An Insurance  vs.  Chongqing Landai Powertrain

Ping An Insurance

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Chongqing Landai Pow

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chongqing Landai Powertrain are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chongqing Landai sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ping An and Chongqing Landai

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

The idea behind Ping An Insurance and Chongqing Landai Powertrain 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.