Correlation Between Ping An and Qtone Education

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

Diversification Opportunities for Ping An and Qtone Education

0.59

Correlation Coefficient

Ping An  Qtone Education

Very weak diversification

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

Pair Corralation between Ping An and Qtone Education

Assuming the 90 days trading horizon Ping An Insurance is expected to generate 0.32 times more return on investment than Qtone Education. However, Ping An Insurance is 3.15 times less risky than Qtone Education. It trades about 0.01 of its potential returns per unit of risk. Qtone Education Group is currently generating about -0.17 per unit of risk. If you would invest  5,325  in Ping An Insurance on September 30, 2024 and sell it today you would earn a total of  2.00  from holding Ping An Insurance or generate 0.04% return on investment over 90 days.

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

Ping An Insurance  vs.  Qtone Education 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 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.

Qtone Education Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qtone Education Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Qtone Education is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ping An and Qtone Education

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

The idea behind Ping An Insurance and Qtone Education 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.