Correlation Between Ping An and MSAD INSURANCE

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

Diversification Opportunities for Ping An and MSAD INSURANCE

0.4

Correlation Coefficient

Ping An  MSAD INSURANCE

Very weak diversification

The 3 months correlation between Ping and MSAD is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and MSAD INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSAD INSURANCE 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 MSAD INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSAD INSURANCE has no effect on the direction of Ping An i.e., Ping An and MSAD INSURANCE go up and down completely randomly.

Pair Corralation between Ping An and MSAD INSURANCE

Assuming the 90 days trading horizon Ping An is expected to generate 16.87 times less return on investment than MSAD INSURANCE. In addition to that, Ping An is 1.83 times more volatile than MSAD INSURANCE. It trades about 0.0 of its total potential returns per unit of risk. MSAD INSURANCE is currently generating about 0.04 per unit of volatility. If you would invest  2,100  in MSAD INSURANCE on December 28, 2024 and sell it today you would earn a total of  60.00  from holding MSAD INSURANCE or generate 2.86% 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.  MSAD INSURANCE

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.

MSAD INSURANCE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MSAD INSURANCE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, MSAD INSURANCE 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 Ping An and MSAD INSURANCE

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

The idea behind Ping An Insurance and MSAD 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.