Correlation Between Ping An and Jinlong Machinery

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

Diversification Opportunities for Ping An and Jinlong Machinery

0.77

Correlation Coefficient

Ping An  Jinlong Machinery

Poor diversification

The 3 months correlation between Ping and Jinlong is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Jinlong Machinery Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinlong Machinery 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 Jinlong Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinlong Machinery has no effect on the direction of Ping An i.e., Ping An and Jinlong Machinery go up and down completely randomly.

Pair Corralation between Ping An and Jinlong Machinery

Assuming the 90 days trading horizon Ping An Insurance is expected to under-perform the Jinlong Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Ping An Insurance is 2.1 times less risky than Jinlong Machinery. The stock trades about -0.22 of its potential returns per unit of risk. The Jinlong Machinery Electronic is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  473.00  in Jinlong Machinery Electronic on October 26, 2024 and sell it today you would lose (34.00) from holding Jinlong Machinery Electronic or give up 7.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Ping An Insurance  vs.  Jinlong Machinery Electronic

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 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.

Jinlong Machinery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jinlong Machinery Electronic 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.

Pair Trading with Ping An and Jinlong Machinery

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

The idea behind Ping An Insurance and Jinlong Machinery Electronic 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.