Correlation Between Hengdian Entertainment and Ping An
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By analyzing existing cross correlation between Hengdian Entertainment Co and Ping An Insurance, you can compare the effects of market volatilities on Hengdian Entertainment 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 Hengdian Entertainment with a short position of Ping An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hengdian Entertainment and Ping An.
Diversification Opportunities for Hengdian Entertainment and Ping An
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hengdian and Ping is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hengdian Entertainment Co 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 Hengdian Entertainment 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 Hengdian Entertainment Co 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 Hengdian Entertainment i.e., Hengdian Entertainment and Ping An go up and down completely randomly.
Pair Corralation between Hengdian Entertainment and Ping An
Assuming the 90 days trading horizon Hengdian Entertainment Co is expected to generate 1.67 times more return on investment than Ping An. However, Hengdian Entertainment is 1.67 times more volatile than Ping An Insurance. It trades about 0.02 of its potential returns per unit of risk. Ping An Insurance is currently generating about 0.03 per unit of risk. If you would invest 1,410 in Hengdian Entertainment Co on September 12, 2024 and sell it today you would earn a total of 175.00 from holding Hengdian Entertainment Co or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hengdian Entertainment Co vs. Ping An Insurance
Performance |
| Timeline |
| Hengdian Entertainment |
| Ping An Insurance |
Hengdian Entertainment and Ping An Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hengdian Entertainment and Ping An
The main advantage of trading using opposite Hengdian Entertainment and Ping An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hengdian Entertainment 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 Hengdian Entertainment Co 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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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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