Correlation Between Ping An and AIA Group
Can any of the company-specific risk be diversified away by investing in both Ping An and AIA Group 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 Ping An and AIA Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ping An Insurance and AIA Group Ltd, you can compare the effects of market volatilities on Ping An and AIA Group 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 Ping An with a short position of AIA Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and AIA Group.
Diversification Opportunities for Ping An and AIA Group
Very poor diversification
The 3 months correlation between Ping and AIA is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and AIA Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIA Group and Ping An 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 Ping An Insurance are associated (or correlated) with AIA Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIA Group has no effect on the direction of Ping An i.e., Ping An and AIA Group go up and down completely randomly.
Pair Corralation between Ping An and AIA Group
Assuming the 90 days horizon Ping An Insurance is expected to generate 1.7 times more return on investment than AIA Group. However, Ping An is 1.7 times more volatile than AIA Group Ltd. It trades about 0.1 of its potential returns per unit of risk. AIA Group Ltd is currently generating about 0.04 per unit of risk. If you would invest 901.00 in Ping An Insurance on August 28, 2024 and sell it today you would earn a total of 234.00 from holding Ping An Insurance or generate 25.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ping An Insurance vs. AIA Group Ltd
Performance |
| Timeline |
| Ping An Insurance |
| AIA Group |
Ping An and AIA Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ping An and AIA Group
The main advantage of trading using opposite Ping An and AIA Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An position performs unexpectedly, AIA Group 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 AIA Group will offset losses from the drop in AIA Group's long position.| Ping An vs. AIA Group | Ping An vs. Jackson Financial | Ping An vs. Sanlam Ltd PK | Ping An vs. CNO Financial Group |
| AIA Group vs. CNO Financial Group | AIA Group vs. Genworth Financial | AIA Group vs. MetLife Preferred Stock | AIA Group vs. Prudential Public 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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