Correlation Between Ping An and Hubei Geoway

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

Diversification Opportunities for Ping An and Hubei Geoway

-0.19

Correlation Coefficient

Ping An  Hubei Geoway

Good diversification

The 3 months correlation between Ping and Hubei is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Hubei Geoway Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Geoway Investment 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 Hubei Geoway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Geoway Investment has no effect on the direction of Ping An i.e., Ping An and Hubei Geoway go up and down completely randomly.

Pair Corralation between Ping An and Hubei Geoway

Assuming the 90 days trading horizon Ping An Insurance is expected to generate 0.72 times more return on investment than Hubei Geoway. However, Ping An Insurance is 1.38 times less risky than Hubei Geoway. It trades about 0.09 of its potential returns per unit of risk. Hubei Geoway Investment is currently generating about 0.05 per unit of risk. If you would invest  4,313  in Ping An Insurance on September 1, 2024 and sell it today you would earn a total of  1,012  from holding Ping An Insurance or generate 23.46% return on investment over 90 days.

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

Ping An Insurance  vs.  Hubei Geoway Investment

Ping An Insurance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ping An sustained solid returns over the last few months and may actually be approaching a breakup point.

Hubei Geoway Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hubei Geoway Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hubei Geoway 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 Hubei Geoway

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

The idea behind Ping An Insurance and Hubei Geoway Investment 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.