Correlation Between Ping An and AM EAGLE

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

Diversification Opportunities for Ping An and AM EAGLE

0.25

Correlation Coefficient

Ping An  AM EAGLE

Modest diversification

The 3 months correlation between Ping and AFG is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and AM EAGLE OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AM EAGLE OUTFITTERS 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 AM EAGLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AM EAGLE OUTFITTERS has no effect on the direction of Ping An i.e., Ping An and AM EAGLE go up and down completely randomly.

Pair Corralation between Ping An and AM EAGLE

Assuming the 90 days trading horizon Ping An Insurance is expected to generate 0.75 times more return on investment than AM EAGLE. However, Ping An Insurance is 1.33 times less risky than AM EAGLE. It trades about 0.12 of its potential returns per unit of risk. AM EAGLE OUTFITTERS is currently generating about -0.14 per unit of risk. If you would invest  535.00  in Ping An Insurance on September 25, 2024 and sell it today you would earn a total of  33.00  from holding Ping An Insurance or generate 6.17% return on investment over 90 days.

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

Ping An Insurance  vs.  AM EAGLE OUTFITTERS

Ping An Insurance

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ping An unveiled solid returns over the last few months and may actually be approaching a breakup point.

AM EAGLE OUTFITTERS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AM EAGLE OUTFITTERS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Ping An and AM EAGLE

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

The idea behind Ping An Insurance and AM EAGLE OUTFITTERS 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.