Correlation Between Japan Asia and Ping An

Can any of the company-specific risk be diversified away by investing in both Japan Asia and Ping An 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 Japan Asia and Ping An into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Japan Asia Investment and Ping An Insurance, you can compare the effects of market volatilities on Japan Asia and Ping An 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 Japan Asia with a short position of Ping An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Asia and Ping An.

Diversification Opportunities for Japan Asia and Ping An

-0.24

Correlation Coefficient

Japan Asia  Ping An

Very good diversification

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

Pair Corralation between Japan Asia and Ping An

Assuming the 90 days horizon Japan Asia Investment is expected to under-perform the Ping An. But the stock apears to be less risky and, when comparing its historical volatility, Japan Asia Investment is 1.7 times less risky than Ping An. The stock trades about -0.06 of its potential returns per unit of risk. The Ping An Insurance is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  550.00  in Ping An Insurance on September 13, 2024 and sell it today you would earn a total of  21.00  from holding Ping An Insurance or generate 3.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Japan Asia Investment  vs.  Ping An Insurance

Japan Asia Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Japan Asia Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Japan Asia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ping An Insurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ping An unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Japan Asia and Ping An

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

The idea behind Japan Asia Investment and Ping An Insurance 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.