Correlation Between Lincoln National and Ping An

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

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

Diversification Opportunities for Lincoln National and Ping An

0.47

Correlation Coefficient

Lincoln National  Ping An

Very weak diversification

The 3 months correlation between Lincoln and Ping is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln National 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 Lincoln National 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 Lincoln National 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 Lincoln National i.e., Lincoln National and Ping An go up and down completely randomly.

Pair Corralation between Lincoln National and Ping An

Considering the 90-day investment horizon Lincoln National is expected to generate 0.8 times more return on investment than Ping An. However, Lincoln National is 1.25 times less risky than Ping An. It trades about 0.11 of its potential returns per unit of risk. Ping An Insurance is currently generating about 0.09 per unit of risk. If you would invest  3,104  in Lincoln National on December 28, 2024 and sell it today you would earn a total of  453.00  from holding Lincoln National or generate 14.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.8%
Values	Daily Returns

Lincoln National  vs.  Ping An Insurance

Lincoln National

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln National are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Lincoln National exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ping An Insurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Ping An reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lincoln National and Ping An

The main advantage of trading using opposite Lincoln National and Ping An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln National 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 Lincoln National 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.