Correlation Between Eagle Materials and Ping An
Can any of the company-specific risk be diversified away by investing in both Eagle Materials 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 Eagle Materials and Ping An into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and Ping An Insurance, you can compare the effects of market volatilities on Eagle Materials 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 Eagle Materials with a short position of Ping An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and Ping An.
Diversification Opportunities for Eagle Materials and Ping An
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eagle and Ping is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials 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 Eagle Materials 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 Eagle Materials 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 Eagle Materials i.e., Eagle Materials and Ping An go up and down completely randomly.
Pair Corralation between Eagle Materials and Ping An
Assuming the 90 days horizon Eagle Materials is expected to generate 4.25 times less return on investment than Ping An. But when comparing it to its historical volatility, Eagle Materials is 2.22 times less risky than Ping An. It trades about 0.07 of its potential returns per unit of risk. Ping An Insurance is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 232.00 in Ping An Insurance on September 3, 2024 and sell it today you would earn a total of 308.00 from holding Ping An Insurance or generate 132.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Materials vs. Ping An Insurance
Performance |
| Timeline |
| Eagle Materials |
| Ping An Insurance |
Eagle Materials and Ping An Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and Ping An
The main advantage of trading using opposite Eagle Materials and Ping An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials 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.| Eagle Materials vs. Vulcan Materials | Eagle Materials vs. Superior Plus Corp | Eagle Materials vs. NMI Holdings | Eagle Materials vs. Origin Agritech |
| Ping An vs. LION ONE METALS | Ping An vs. IDP EDUCATION LTD | Ping An vs. DEVRY EDUCATION GRP | Ping An vs. Perseus Mining Limited |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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