Correlation Between Ping An and Eastern Air

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

Diversification Opportunities for Ping An and Eastern Air

0.19

Correlation Coefficient

Ping An  Eastern Air

Average diversification

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

Pair Corralation between Ping An and Eastern Air

Assuming the 90 days trading horizon Ping An Insurance is expected to generate 0.55 times more return on investment than Eastern Air. However, Ping An Insurance is 1.82 times less risky than Eastern Air. It trades about -0.08 of its potential returns per unit of risk. Eastern Air Logistics is currently generating about -0.08 per unit of risk. If you would invest  5,393  in Ping An Insurance on December 4, 2024 and sell it today you would lose (360.00) from holding Ping An Insurance or give up 6.68% of portfolio value over 90 days.

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

Ping An Insurance  vs.  Eastern Air Logistics

Ping An Insurance

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Eastern Air Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastern Air Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Ping An and Eastern Air

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

The idea behind Ping An Insurance and Eastern Air Logistics 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 Anywhere module to track or share privately all of your investments from the convenience of any device.