Correlation Between Ping An and Xinhua Winshare

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

Diversification Opportunities for Ping An and Xinhua Winshare

0.38

Correlation Coefficient

Ping An  Xinhua Winshare

Weak diversification

The 3 months correlation between Ping and Xinhua is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Xinhua Winshare Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinhua Winshare Publ 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 Xinhua Winshare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinhua Winshare Publ has no effect on the direction of Ping An i.e., Ping An and Xinhua Winshare go up and down completely randomly.

Pair Corralation between Ping An and Xinhua Winshare

Assuming the 90 days trading horizon Ping An Insurance is expected to under-perform the Xinhua Winshare. But the stock apears to be less risky and, when comparing its historical volatility, Ping An Insurance is 1.13 times less risky than Xinhua Winshare. The stock trades about -0.02 of its potential returns per unit of risk. The Xinhua Winshare Publishing is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest  1,382  in Xinhua Winshare Publishing on September 23, 2024 and sell it today you would earn a total of  199.00  from holding Xinhua Winshare Publishing or generate 14.4% return on investment over 90 days.

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

Ping An Insurance  vs.  Xinhua Winshare Publishing

Ping An Insurance

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 8 (%) 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.

Xinhua Winshare Publ

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xinhua Winshare Publishing are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinhua Winshare sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ping An and Xinhua Winshare

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

The idea behind Ping An Insurance and Xinhua Winshare Publishing 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.