Correlation Between Ping An and Power Of

Can any of the company-specific risk be diversified away by investing in both Ping An and Power Of 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 Power Of 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 Power of, you can compare the effects of market volatilities on Ping An and Power Of 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 Power Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and Power Of.

Diversification Opportunities for Ping An and Power Of

0.43

Correlation Coefficient

Ping An  Power Of

Very weak diversification

The 3 months correlation between Ping and Power is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Power of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Of 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 Power Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Of has no effect on the direction of Ping An i.e., Ping An and Power Of go up and down completely randomly.

Pair Corralation between Ping An and Power Of

Assuming the 90 days horizon Ping An is expected to generate 1.36 times less return on investment than Power Of. In addition to that, Ping An is 2.51 times more volatile than Power of. It trades about 0.02 of its total potential returns per unit of risk. Power of is currently generating about 0.08 per unit of volatility. If you would invest  2,125  in Power of on September 12, 2024 and sell it today you would earn a total of  1,157  from holding Power of or generate 54.45% return on investment over 90 days.

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

Ping An Insurance  vs.  Power of

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 fairly fragile basic indicators, Ping An showed solid returns over the last few months and may actually be approaching a breakup point.

Power Of

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Power of are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Power Of may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ping An and Power Of

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

The idea behind Ping An Insurance and Power of 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.