Correlation Between China Taiping and SANLAM
Can any of the company-specific risk be diversified away by investing in both China Taiping and SANLAM 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 SANLAM 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 SANLAM LTD RC 01, you can compare the effects of market volatilities on China Taiping and SANLAM 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 SANLAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Taiping and SANLAM.
Diversification Opportunities for China Taiping and SANLAM
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and SANLAM is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding China Taiping Insurance and SANLAM LTD RC 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANLAM LTD RC 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 SANLAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANLAM LTD RC has no effect on the direction of China Taiping i.e., China Taiping and SANLAM go up and down completely randomly.
Pair Corralation between China Taiping and SANLAM
Assuming the 90 days trading horizon China Taiping Insurance is expected to under-perform the SANLAM. In addition to that, China Taiping is 1.24 times more volatile than SANLAM LTD RC 01. It trades about -0.09 of its total potential returns per unit of risk. SANLAM LTD RC 01 is currently generating about -0.08 per unit of volatility. If you would invest 875.00 in SANLAM LTD RC 01 on October 25, 2024 and sell it today you would lose (30.00) from holding SANLAM LTD RC 01 or give up 3.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Taiping Insurance vs. SANLAM LTD RC 01
Performance |
| Timeline |
| China Taiping Insurance |
| SANLAM LTD RC |
China Taiping and SANLAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Taiping and SANLAM
The main advantage of trading using opposite China Taiping and SANLAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Taiping position performs unexpectedly, SANLAM 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 SANLAM will offset losses from the drop in SANLAM'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 |
| SANLAM vs. REINET INVESTMENTS SCA | SANLAM vs. MidCap Financial Investment | SANLAM vs. Maple Leaf Foods | SANLAM vs. PennantPark Investment |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |