Correlation Between Ping An and Asahi Group

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

Diversification Opportunities for Ping An and Asahi Group

0.59

Correlation Coefficient

Ping An  Asahi Group

Very weak diversification

The 3 months correlation between Ping and Asahi is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Asahi Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asahi Group Holdings 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 Asahi Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asahi Group Holdings has no effect on the direction of Ping An i.e., Ping An and Asahi Group go up and down completely randomly.

Pair Corralation between Ping An and Asahi Group

Assuming the 90 days trading horizon Ping An is expected to generate 6.74 times less return on investment than Asahi Group. In addition to that, Ping An is 1.16 times more volatile than Asahi Group Holdings. It trades about 0.02 of its total potential returns per unit of risk. Asahi Group Holdings is currently generating about 0.12 per unit of volatility. If you would invest  1,025  in Asahi Group Holdings on December 1, 2024 and sell it today you would earn a total of  141.00  from holding Asahi Group Holdings or generate 13.76% 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.  Asahi Group Holdings

Ping An Insurance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Asahi Group Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asahi Group Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Asahi Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ping An and Asahi Group

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

The idea behind Ping An Insurance and Asahi Group Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.