Correlation Between Walgreens Boots and Ping An

Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and Ping An 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 Walgreens Boots and Ping An into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walgreens Boots Alliance and Ping An Insurance, you can compare the effects of market volatilities on Walgreens Boots and Ping An 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 Walgreens Boots with a short position of Ping An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and Ping An.

Diversification Opportunities for Walgreens Boots and Ping An

0.3

Correlation Coefficient

Walgreens Boots  Ping An

Weak diversification

The 3 months correlation between Walgreens and Ping is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Ping An Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ping An Insurance and Walgreens Boots 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 Walgreens Boots Alliance are associated (or correlated) with Ping An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ping An Insurance has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Ping An go up and down completely randomly.

Pair Corralation between Walgreens Boots and Ping An

Assuming the 90 days horizon Walgreens Boots is expected to generate 1.62 times less return on investment than Ping An. But when comparing it to its historical volatility, Walgreens Boots Alliance is 1.12 times less risky than Ping An. It trades about 0.11 of its potential returns per unit of risk. Ping An Insurance is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  401.00  in Ping An Insurance on September 12, 2024 and sell it today you would earn a total of  180.00  from holding Ping An Insurance or generate 44.89% return on investment over 90 days.

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

Walgreens Boots Alliance  vs.  Ping An Insurance

Walgreens Boots Alliance

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Walgreens Boots reported solid returns over the last few months and may actually be approaching a breakup point.

Ping An Insurance

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 12 (%) 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.

Pair Trading with Walgreens Boots and Ping An

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

The idea behind Walgreens Boots Alliance and Ping An 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.