Correlation Between Ping An and Biwin Storage

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

Diversification Opportunities for Ping An and Biwin Storage

0.96

Correlation Coefficient

Ping An  Biwin Storage

Almost no diversification

The 3 months correlation between Ping and Biwin is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Biwin Storage Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biwin Storage Technology 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 Biwin Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biwin Storage Technology has no effect on the direction of Ping An i.e., Ping An and Biwin Storage go up and down completely randomly.

Pair Corralation between Ping An and Biwin Storage

Assuming the 90 days trading horizon Ping An is expected to generate 1.4 times less return on investment than Biwin Storage. But when comparing it to its historical volatility, Ping An Insurance is 1.82 times less risky than Biwin Storage. It trades about 0.17 of its potential returns per unit of risk. Biwin Storage Technology is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,228  in Biwin Storage Technology on September 12, 2024 and sell it today you would earn a total of  1,655  from holding Biwin Storage Technology or generate 39.14% return on investment over 90 days.

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

Ping An Insurance  vs.  Biwin Storage Technology

Ping An Insurance

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 13 (%) 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.

Biwin Storage Technology

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Ping An and Biwin Storage

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

The idea behind Ping An Insurance and Biwin Storage Technology 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.