Correlation Between Ping An and Northking Information

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

Diversification Opportunities for Ping An and Northking Information

0.28

Correlation Coefficient

Ping An  Northking Information

Modest diversification

The 3 months correlation between Ping and Northking is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Northking Information Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northking Information 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 Northking Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northking Information has no effect on the direction of Ping An i.e., Ping An and Northking Information go up and down completely randomly.

Pair Corralation between Ping An and Northking Information

Assuming the 90 days trading horizon Ping An Insurance is expected to under-perform the Northking Information. But the stock apears to be less risky and, when comparing its historical volatility, Ping An Insurance is 2.74 times less risky than Northking Information. The stock trades about -0.03 of its potential returns per unit of risk. The Northking Information Technology is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,471  in Northking Information Technology on December 26, 2024 and sell it today you would earn a total of  390.00  from holding Northking Information Technology or generate 26.51% return on investment over 90 days.

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

Ping An Insurance  vs.  Northking Information Technolo

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 somewhat strong basic indicators, Ping An is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Northking Information

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northking Information Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Northking Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ping An and Northking Information

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

The idea behind Ping An Insurance and Northking Information Technology 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.