Correlation Between Peoples Insurance and Yingde Greatchem

Can any of the company-specific risk be diversified away by investing in both Peoples Insurance and Yingde Greatchem 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 Yingde Greatchem 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 Yingde Greatchem Chemicals, you can compare the effects of market volatilities on Peoples Insurance and Yingde Greatchem 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 Yingde Greatchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peoples Insurance and Yingde Greatchem.

Diversification Opportunities for Peoples Insurance and Yingde Greatchem

0.23

Correlation Coefficient

Peoples Insurance  Yingde Greatchem

Modest diversification

The 3 months correlation between Peoples and Yingde is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Peoples Insurance of and Yingde Greatchem Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yingde Greatchem Che 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 Yingde Greatchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yingde Greatchem Che has no effect on the direction of Peoples Insurance i.e., Peoples Insurance and Yingde Greatchem go up and down completely randomly.

Pair Corralation between Peoples Insurance and Yingde Greatchem

Assuming the 90 days trading horizon Peoples Insurance of is expected to generate 0.56 times more return on investment than Yingde Greatchem. However, Peoples Insurance of is 1.79 times less risky than Yingde Greatchem. It trades about 0.05 of its potential returns per unit of risk. Yingde Greatchem Chemicals is currently generating about -0.03 per unit of risk. If you would invest  511.00  in Peoples Insurance of on October 10, 2024 and sell it today you would earn a total of  185.00  from holding Peoples Insurance of or generate 36.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	78.62%
Values	Daily Returns

Peoples Insurance of  vs.  Yingde Greatchem Chemicals

Peoples Insurance

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, Peoples Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Yingde Greatchem Che

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yingde Greatchem Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Yingde Greatchem is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Peoples Insurance and Yingde Greatchem

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

The idea behind Peoples Insurance of and Yingde Greatchem Chemicals 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.