Correlation Between Peoples Insurance and Tongding Interconnection

Can any of the company-specific risk be diversified away by investing in both Peoples Insurance and Tongding Interconnection 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 Peoples Insurance and Tongding Interconnection into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Peoples Insurance of and Tongding Interconnection Information, you can compare the effects of market volatilities on Peoples Insurance and Tongding Interconnection 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 Peoples Insurance with a short position of Tongding Interconnection. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peoples Insurance and Tongding Interconnection.

Diversification Opportunities for Peoples Insurance and Tongding Interconnection

0.24

Correlation Coefficient

Peoples Insurance  Tongding Interconnection

Modest diversification

The 3 months correlation between Peoples and Tongding is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Peoples Insurance of and Tongding Interconnection Infor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tongding Interconnection and Peoples Insurance 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 Peoples Insurance of are associated (or correlated) with Tongding Interconnection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tongding Interconnection has no effect on the direction of Peoples Insurance i.e., Peoples Insurance and Tongding Interconnection go up and down completely randomly.

Pair Corralation between Peoples Insurance and Tongding Interconnection

Assuming the 90 days trading horizon Peoples Insurance is expected to generate 3.96 times less return on investment than Tongding Interconnection. But when comparing it to its historical volatility, Peoples Insurance of is 1.52 times less risky than Tongding Interconnection. It trades about 0.05 of its potential returns per unit of risk. Tongding Interconnection Information is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  319.00  in Tongding Interconnection Information on December 10, 2024 and sell it today you would earn a total of  184.00  from holding Tongding Interconnection Information or generate 57.68% return on investment over 90 days.

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

Peoples Insurance of  vs.  Tongding Interconnection Infor

Peoples Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peoples Insurance of 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Tongding Interconnection

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tongding Interconnection Information are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tongding Interconnection may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Peoples Insurance and Tongding Interconnection

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

The idea behind Peoples Insurance of and Tongding Interconnection Information 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.