Correlation Between Ping An and AOYAMA TRADING

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

Diversification Opportunities for Ping An and AOYAMA TRADING

0.04

Correlation Coefficient

Ping An  AOYAMA TRADING

Significant diversification

The 3 months correlation between Ping and AOYAMA is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and AOYAMA TRADING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOYAMA TRADING 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 AOYAMA TRADING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOYAMA TRADING has no effect on the direction of Ping An i.e., Ping An and AOYAMA TRADING go up and down completely randomly.

Pair Corralation between Ping An and AOYAMA TRADING

Assuming the 90 days trading horizon Ping An Insurance is expected to generate 0.99 times more return on investment than AOYAMA TRADING. However, Ping An Insurance is 1.01 times less risky than AOYAMA TRADING. It trades about 0.12 of its potential returns per unit of risk. AOYAMA TRADING is currently generating about 0.12 per unit of risk. If you would invest  343.00  in Ping An Insurance on September 17, 2024 and sell it today you would earn a total of  223.00  from holding Ping An Insurance or generate 65.01% return on investment over 90 days.

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

Ping An Insurance  vs.  AOYAMA TRADING

Ping An Insurance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Ping An unveiled solid returns over the last few months and may actually be approaching a breakup point.

AOYAMA TRADING

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AOYAMA TRADING are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AOYAMA TRADING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ping An and AOYAMA TRADING

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

The idea behind Ping An Insurance and AOYAMA TRADING 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.