Correlation Between INSURANCE AUST and Ping An

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

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

Diversification Opportunities for INSURANCE AUST and Ping An

-0.65

Correlation Coefficient

INSURANCE AUST  Ping An

Excellent diversification

The 3 months correlation between INSURANCE and Ping is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP 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 INSURANCE AUST 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 INSURANCE AUST GRP 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 INSURANCE AUST i.e., INSURANCE AUST and Ping An go up and down completely randomly.

Pair Corralation between INSURANCE AUST and Ping An

Assuming the 90 days trading horizon INSURANCE AUST GRP is expected to under-perform the Ping An. In addition to that, INSURANCE AUST is 1.01 times more volatile than Ping An Insurance. It trades about -0.06 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 30, 2024 and sell it today you would lose (9.00) from holding Ping An Insurance or give up 1.58% of portfolio value over 90 days.

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

INSURANCE AUST GRP  vs.  Ping An Insurance

INSURANCE AUST GRP

Risk-Adjusted Performance

Very Weak

Over the last 90 days INSURANCE AUST GRP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 INSURANCE AUST and Ping An

The main advantage of trading using opposite INSURANCE AUST and Ping An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST 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 INSURANCE AUST GRP 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.