Correlation Between Ping An and GRINM Semiconductor

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

Diversification Opportunities for Ping An and GRINM Semiconductor

0.94

Correlation Coefficient

Ping An  GRINM Semiconductor

Almost no diversification

The 3 months correlation between Ping and GRINM is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and GRINM Semiconductor Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRINM Semiconductor 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 GRINM Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRINM Semiconductor has no effect on the direction of Ping An i.e., Ping An and GRINM Semiconductor go up and down completely randomly.

Pair Corralation between Ping An and GRINM Semiconductor

Assuming the 90 days trading horizon Ping An Insurance is expected to under-perform the GRINM Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Ping An Insurance is 1.41 times less risky than GRINM Semiconductor. The stock trades about -0.11 of its potential returns per unit of risk. The GRINM Semiconductor Materials is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,279  in GRINM Semiconductor Materials on September 4, 2024 and sell it today you would lose (16.00) from holding GRINM Semiconductor Materials or give up 1.25% of portfolio value over 90 days.

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

Ping An Insurance  vs.  GRINM Semiconductor Materials

Ping An Insurance

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 12 (%) 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.

GRINM Semiconductor

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GRINM Semiconductor Materials are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GRINM Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ping An and GRINM Semiconductor

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

The idea behind Ping An Insurance and GRINM Semiconductor Materials 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 Global Correlations module to find global opportunities by holding instruments from different markets.