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

-0.55

Correlation Coefficient

Ping An  Power Of

Excellent diversification

The 3 months correlation between Ping and Power is -0.55. 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 Insurance is expected to under-perform the Power Of. In addition to that, Ping An is 1.9 times more volatile than Power of. It trades about -0.04 of its total potential returns per unit of risk. Power of is currently generating about 0.05 per unit of volatility. If you would invest  2,904  in Power of on October 6, 2024 and sell it today you would earn a total of  56.00  from holding Power of or generate 1.93% return on investment over 90 days.

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

Ping An Insurance  vs.  Power of

Ping An Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ping An Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Power Of

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Power of are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Power Of is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.