Correlation Between Ping An and Lincoln National

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

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

Diversification Opportunities for Ping An and Lincoln National

0.47

Correlation Coefficient

Ping An  Lincoln National

Very weak diversification

The 3 months correlation between Ping and Lincoln is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Lincoln National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln National and Ping An 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 Ping An Insurance are associated (or correlated) with Lincoln National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln National has no effect on the direction of Ping An i.e., Ping An and Lincoln National go up and down completely randomly.

Pair Corralation between Ping An and Lincoln National

Assuming the 90 days horizon Ping An is expected to generate 1.04 times less return on investment than Lincoln National. In addition to that, Ping An is 1.25 times more volatile than Lincoln National. It trades about 0.09 of its total potential returns per unit of risk. Lincoln National is currently generating about 0.11 per unit of volatility. 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

Ping An Insurance  vs.  Lincoln National

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.

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.

Pair Trading with Ping An and Lincoln National

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

The idea behind Ping An Insurance and Lincoln National 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.