Correlation Between China Life and Ping An
Can any of the company-specific risk be diversified away by investing in both China Life 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 China Life and Ping An into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Life Insurance and Ping An Insurance, you can compare the effects of market volatilities on China Life 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 Life with a short position of Ping An. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Life and Ping An.
Diversification Opportunities for China Life and Ping An
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between China and Ping is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding China Life Insurance 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 Life 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 Life Insurance 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 Life i.e., China Life and Ping An go up and down completely randomly.
Pair Corralation between China Life and Ping An
Assuming the 90 days horizon China Life Insurance is expected to generate 3.05 times more return on investment than Ping An. However, China Life is 3.05 times more volatile than Ping An Insurance. It trades about -0.04 of its potential returns per unit of risk. Ping An Insurance is currently generating about -0.37 per unit of risk. If you would invest 211.00 in China Life Insurance on August 24, 2024 and sell it today you would lose (11.00) from holding China Life Insurance or give up 5.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Life Insurance vs. Ping An Insurance
Performance |
| Timeline |
| China Life Insurance |
| Ping An Insurance |
China Life and Ping An Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Life and Ping An
The main advantage of trading using opposite China Life and Ping An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Life 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.| China Life vs. CNO Financial Group | China Life vs. Ping An Insurance | China Life vs. Lincoln National | China Life vs. AIA Group Ltd |
| Ping An vs. Ping An Insurance | Ping An vs. CNO Financial Group | Ping An vs. Genworth Financial | Ping An vs. MetLife Preferred Stock |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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