Correlation Between Ping An and Guangxi Wuzhou

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

Diversification Opportunities for Ping An and Guangxi Wuzhou

-0.51

Correlation Coefficient

Ping An  Guangxi Wuzhou

Excellent diversification

The 3 months correlation between Ping and Guangxi is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Guangxi Wuzhou Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangxi Wuzhou Commu 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 Guangxi Wuzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangxi Wuzhou Commu has no effect on the direction of Ping An i.e., Ping An and Guangxi Wuzhou go up and down completely randomly.

Pair Corralation between Ping An and Guangxi Wuzhou

Assuming the 90 days trading horizon Ping An Insurance is expected to under-perform the Guangxi Wuzhou. But the stock apears to be less risky and, when comparing its historical volatility, Ping An Insurance is 3.78 times less risky than Guangxi Wuzhou. The stock trades about -0.29 of its potential returns per unit of risk. The Guangxi Wuzhou Communications is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  406.00  in Guangxi Wuzhou Communications on October 8, 2024 and sell it today you would earn a total of  73.00  from holding Guangxi Wuzhou Communications or generate 17.98% 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.  Guangxi Wuzhou Communications

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.

Guangxi Wuzhou Commu

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Ping An and Guangxi Wuzhou

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

The idea behind Ping An Insurance and Guangxi Wuzhou Communications 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.