Correlation Between Ping An and Jiangsu Changfa

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Ping An and Jiangsu Changfa 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 Jiangsu Changfa 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 Jiangsu Changfa Refrigeration, you can compare the effects of market volatilities on Ping An and Jiangsu Changfa 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 Jiangsu Changfa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and Jiangsu Changfa.

Diversification Opportunities for Ping An and Jiangsu Changfa

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Ping and Jiangsu is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Jiangsu Changfa Refrigeration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Changfa Refr 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 Jiangsu Changfa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Changfa Refr has no effect on the direction of Ping An i.e., Ping An and Jiangsu Changfa go up and down completely randomly.

Pair Corralation between Ping An and Jiangsu Changfa

Assuming the 90 days trading horizon Ping An is expected to generate 1.31 times less return on investment than Jiangsu Changfa. But when comparing it to its historical volatility, Ping An Insurance is 1.33 times less risky than Jiangsu Changfa. It trades about 0.1 of its potential returns per unit of risk. Jiangsu Changfa Refrigeration is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  373.00  in Jiangsu Changfa Refrigeration on September 7, 2024 and sell it today you would earn a total of  137.00  from holding Jiangsu Changfa Refrigeration or generate 36.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Ping An Insurance  vs.  Jiangsu Changfa Refrigeration

 Performance 
       Timeline  
Ping An Insurance 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ping An sustained solid returns over the last few months and may actually be approaching a breakup point.
Jiangsu Changfa Refr 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Changfa Refrigeration are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Changfa sustained solid returns over the last few months and may actually be approaching a breakup point.

Ping An and Jiangsu Changfa Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ping An and Jiangsu Changfa

The main advantage of trading using opposite Ping An and Jiangsu Changfa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An position performs unexpectedly, Jiangsu Changfa 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 Jiangsu Changfa will offset losses from the drop in Jiangsu Changfa's long position.
The idea behind Ping An Insurance and Jiangsu Changfa Refrigeration 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

Other Complementary Tools

Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Content Syndication
Quickly integrate customizable finance content to your own investment portal