Correlation Between China Life and Prudential Public
Can any of the company-specific risk be diversified away by investing in both China Life and Prudential Public 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 Prudential Public 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 Prudential Public Limited, you can compare the effects of market volatilities on China Life and Prudential Public 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 Prudential Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Life and Prudential Public.
Diversification Opportunities for China Life and Prudential Public
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Prudential is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding China Life Insurance and Prudential Public Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Public 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 Prudential Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Public has no effect on the direction of China Life i.e., China Life and Prudential Public go up and down completely randomly.
Pair Corralation between China Life and Prudential Public
Assuming the 90 days horizon China Life Insurance is expected to under-perform the Prudential Public. In addition to that, China Life is 1.65 times more volatile than Prudential Public Limited. It trades about -0.11 of its total potential returns per unit of risk. Prudential Public Limited is currently generating about -0.06 per unit of volatility. If you would invest 1,690 in Prudential Public Limited on August 28, 2024 and sell it today you would lose (53.00) from holding Prudential Public Limited or give up 3.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Life Insurance vs. Prudential Public Limited
Performance |
| Timeline |
| China Life Insurance |
| Prudential Public |
China Life and Prudential Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Life and Prudential Public
The main advantage of trading using opposite China Life and Prudential Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Life position performs unexpectedly, Prudential Public 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 Prudential Public will offset losses from the drop in Prudential Public's long position.| China Life vs. CNO Financial Group | China Life vs. Genworth Financial | China Life vs. MetLife Preferred Stock | China Life vs. Prudential Public Limited |
| Prudential Public vs. CNO Financial Group | Prudential Public vs. Jackson Financial | Prudential Public vs. MetLife Preferred Stock | Prudential Public vs. Jackson Financial |
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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