Correlation Between Ping An and China Life
Can any of the company-specific risk be diversified away by investing in both Ping An and China Life 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 China Life 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 China Life Insurance, you can compare the effects of market volatilities on Ping An and China Life 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 China Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and China Life.
Diversification Opportunities for Ping An and China Life
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ping and China is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and China Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Life Insurance 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 China Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Life Insurance has no effect on the direction of Ping An i.e., Ping An and China Life go up and down completely randomly.
Pair Corralation between Ping An and China Life
Assuming the 90 days horizon Ping An is expected to generate 3.51 times less return on investment than China Life. But when comparing it to its historical volatility, Ping An Insurance is 1.42 times less risky than China Life. It trades about 0.01 of its potential returns per unit of risk. China Life Insurance is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 143.00 in China Life Insurance on August 24, 2024 and sell it today you would earn a total of 53.00 from holding China Life Insurance or generate 37.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.18% |
| Values | Daily Returns |
Ping An Insurance vs. China Life Insurance
Performance |
| Timeline |
| Ping An Insurance |
| China Life Insurance |
Ping An and China Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ping An and China Life
The main advantage of trading using opposite Ping An and China Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An position performs unexpectedly, China Life 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 China Life will offset losses from the drop in China Life'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 |
| China Life vs. CNO Financial Group | China Life vs. Ping An Insurance | China Life vs. Lincoln National | China Life vs. AIA Group Ltd |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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