Correlation Between Ping An and CAREER EDUCATION

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

Diversification Opportunities for Ping An and CAREER EDUCATION

0.17

Correlation Coefficient

Ping An  CAREER EDUCATION

Average diversification

The 3 months correlation between Ping and CAREER is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and CAREER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAREER EDUCATION 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 CAREER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAREER EDUCATION has no effect on the direction of Ping An i.e., Ping An and CAREER EDUCATION go up and down completely randomly.

Pair Corralation between Ping An and CAREER EDUCATION

Assuming the 90 days trading horizon Ping An Insurance is expected to generate 1.57 times more return on investment than CAREER EDUCATION. However, Ping An is 1.57 times more volatile than CAREER EDUCATION. It trades about 0.14 of its potential returns per unit of risk. CAREER EDUCATION is currently generating about 0.18 per unit of risk. If you would invest  403.00  in Ping An Insurance on September 4, 2024 and sell it today you would earn a total of  141.00  from holding Ping An Insurance or generate 34.99% 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.  CAREER EDUCATION

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 unsteady basic indicators, Ping An unveiled solid returns over the last few months and may actually be approaching a breakup point.

CAREER EDUCATION

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CAREER EDUCATION are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, CAREER EDUCATION exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ping An and CAREER EDUCATION

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

The idea behind Ping An Insurance and CAREER EDUCATION 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.