Correlation Between Ping An and Zhangjiagang Freetrade

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

Diversification Opportunities for Ping An and Zhangjiagang Freetrade

-0.08

Correlation Coefficient

Ping An  Zhangjiagang Freetrade

Good diversification

The 3 months correlation between Ping and Zhangjiagang is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Zhangjiagang Freetrade Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhangjiagang Freetrade 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 Zhangjiagang Freetrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhangjiagang Freetrade has no effect on the direction of Ping An i.e., Ping An and Zhangjiagang Freetrade go up and down completely randomly.

Pair Corralation between Ping An and Zhangjiagang Freetrade

Assuming the 90 days trading horizon Ping An Insurance is expected to under-perform the Zhangjiagang Freetrade. But the stock apears to be less risky and, when comparing its historical volatility, Ping An Insurance is 1.6 times less risky than Zhangjiagang Freetrade. The stock trades about -0.13 of its potential returns per unit of risk. The Zhangjiagang Freetrade Science is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  328.00  in Zhangjiagang Freetrade Science on October 21, 2024 and sell it today you would earn a total of  32.00  from holding Zhangjiagang Freetrade Science or generate 9.76% 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.  Zhangjiagang Freetrade Science

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.

Zhangjiagang Freetrade

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zhangjiagang Freetrade Science are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhangjiagang Freetrade may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ping An and Zhangjiagang Freetrade

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

The idea behind Ping An Insurance and Zhangjiagang Freetrade Science 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.