Correlation Between China State and Ping An
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By analyzing existing cross correlation between China State Construction and Ping An Insurance, you can compare the effects of market volatilities on China State 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 China State with a short position of Ping An. Check out your portfolio center. Please also check ongoing floating volatility patterns of China State and Ping An.
Diversification Opportunities for China State and Ping An
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between China and Ping is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding China State Construction 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 China State 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 China State Construction 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 China State i.e., China State and Ping An go up and down completely randomly.
Pair Corralation between China State and Ping An
Assuming the 90 days trading horizon China State Construction is expected to under-perform the Ping An. But the stock apears to be less risky and, when comparing its historical volatility, China State Construction is 1.15 times less risky than Ping An. The stock trades about -0.22 of its potential returns per unit of risk. The Ping An Insurance is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 5,017 in Ping An Insurance on November 8, 2024 and sell it today you would lose (45.00) from holding Ping An Insurance or give up 0.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China State Construction vs. Ping An Insurance
Performance |
| Timeline |
| China State Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ping An Insurance |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
China State and Ping An Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China State and Ping An
The main advantage of trading using opposite China State and Ping An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China State 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 China State Construction 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.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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