Correlation Between Ping An and AIA
Can any of the company-specific risk be diversified away by investing in both Ping An and AIA 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 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, you can compare the effects of market volatilities on Ping An and AIA 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and AIA.
Diversification Opportunities for Ping An and AIA
Poor diversification
The 3 months correlation between Ping and AIA is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and AIA Group 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. 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 go up and down completely randomly.
Pair Corralation between Ping An and AIA
Assuming the 90 days horizon Ping An Insurance is expected to generate 0.74 times more return on investment than AIA. However, Ping An Insurance is 1.36 times less risky than AIA. It trades about -0.09 of its potential returns per unit of risk. AIA Group is currently generating about -0.15 per unit of risk. If you would invest 1,215 in Ping An Insurance on January 12, 2025 and sell it today you would lose (105.00) from holding Ping An Insurance or give up 8.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ping An Insurance vs. AIA Group
Performance |
| Timeline |
| Ping An Insurance |
| AIA Group |
Ping An and AIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ping An and AIA
The main advantage of trading using opposite Ping An and AIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An position performs unexpectedly, AIA 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 will offset losses from the drop in AIA'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 vs. Ping An Insurance | AIA vs. AIA Group Ltd | AIA vs. CNO Financial Group | AIA vs. MetLife Preferred Stock |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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