Correlation Between LGI Homes and Ping An

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

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

Diversification Opportunities for LGI Homes and Ping An

-0.61

Correlation Coefficient

LGI Homes  Ping An

Excellent diversification

The 3 months correlation between LGI and Ping is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes 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 LGI Homes 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 LGI Homes 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 LGI Homes i.e., LGI Homes and Ping An go up and down completely randomly.

Pair Corralation between LGI Homes and Ping An

Assuming the 90 days trading horizon LGI Homes is expected to under-perform the Ping An. In addition to that, LGI Homes is 1.07 times more volatile than Ping An Insurance. It trades about -0.17 of its total potential returns per unit of risk. Ping An Insurance is currently generating about 0.0 per unit of volatility. If you would invest  568.00  in Ping An Insurance on December 28, 2024 and sell it today you would lose (7.00) from holding Ping An Insurance or give up 1.23% of portfolio value over 90 days.

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

LGI Homes  vs.  Ping An Insurance

LGI Homes

Risk-Adjusted Performance

Very Weak

Over the last 90 days LGI Homes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ping An Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ping An Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ping An is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with LGI Homes and Ping An

The main advantage of trading using opposite LGI Homes and Ping An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes 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 LGI Homes 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.