Correlation Between Ping An and Anhui Shiny

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

Diversification Opportunities for Ping An and Anhui Shiny

-0.43

Correlation Coefficient

Ping An  Anhui Shiny

Very good diversification

The 3 months correlation between Ping and Anhui is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Anhui Shiny Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Shiny Electronic 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 Anhui Shiny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Shiny Electronic has no effect on the direction of Ping An i.e., Ping An and Anhui Shiny go up and down completely randomly.

Pair Corralation between Ping An and Anhui Shiny

Assuming the 90 days trading horizon Ping An Insurance is expected to under-perform the Anhui Shiny. But the stock apears to be less risky and, when comparing its historical volatility, Ping An Insurance is 3.47 times less risky than Anhui Shiny. The stock trades about -0.23 of its potential returns per unit of risk. The Anhui Shiny Electronic is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,912  in Anhui Shiny Electronic on October 24, 2024 and sell it today you would earn a total of  293.00  from holding Anhui Shiny Electronic or generate 15.32% return on investment over 90 days.

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

Ping An Insurance  vs.  Anhui Shiny 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 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.

Anhui Shiny Electronic

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Shiny Electronic are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Shiny sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ping An and Anhui Shiny

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

The idea behind Ping An Insurance and Anhui Shiny 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..