Correlation Between China Taiping and Aflac Incorporated
Can any of the company-specific risk be diversified away by investing in both China Taiping and Aflac Incorporated 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 Taiping and Aflac Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Taiping Insurance and Aflac Incorporated, you can compare the effects of market volatilities on China Taiping and Aflac Incorporated 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 Taiping with a short position of Aflac Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Taiping and Aflac Incorporated.
Diversification Opportunities for China Taiping and Aflac Incorporated
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Aflac is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding China Taiping Insurance and Aflac Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aflac Incorporated and China Taiping 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 Taiping Insurance are associated (or correlated) with Aflac Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aflac Incorporated has no effect on the direction of China Taiping i.e., China Taiping and Aflac Incorporated go up and down completely randomly.
Pair Corralation between China Taiping and Aflac Incorporated
Assuming the 90 days trading horizon China Taiping Insurance is expected to under-perform the Aflac Incorporated. In addition to that, China Taiping is 2.39 times more volatile than Aflac Incorporated. It trades about -0.09 of its total potential returns per unit of risk. Aflac Incorporated is currently generating about 0.13 per unit of volatility. If you would invest 9,950 in Aflac Incorporated on October 25, 2024 and sell it today you would earn a total of 235.00 from holding Aflac Incorporated or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
China Taiping Insurance vs. Aflac Incorporated
Performance |
| Timeline |
| China Taiping Insurance |
| Aflac Incorporated |
China Taiping and Aflac Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Taiping and Aflac Incorporated
The main advantage of trading using opposite China Taiping and Aflac Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Taiping position performs unexpectedly, Aflac Incorporated 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 Aflac Incorporated will offset losses from the drop in Aflac Incorporated's long position.| China Taiping vs. TEXAS ROADHOUSE | China Taiping vs. Goosehead Insurance | China Taiping vs. G III Apparel Group | China Taiping vs. Transport International Holdings |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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