Correlation Between Prudential Public and China Life
Can any of the company-specific risk be diversified away by investing in both Prudential Public 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 Prudential Public and China Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Public Limited and China Life Insurance, you can compare the effects of market volatilities on Prudential Public 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 Prudential Public with a short position of China Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Public and China Life.
Diversification Opportunities for Prudential Public and China Life
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Prudential and China is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Public Limited 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 Prudential Public 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 Prudential Public Limited 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 Prudential Public i.e., Prudential Public and China Life go up and down completely randomly.
Pair Corralation between Prudential Public and China Life
Considering the 90-day investment horizon Prudential Public Limited is expected to generate 0.61 times more return on investment than China Life. However, Prudential Public Limited is 1.65 times less risky than China Life. It trades about -0.06 of its potential returns per unit of risk. China Life Insurance is currently generating about -0.11 per unit of risk. If you would invest 1,690 in Prudential Public Limited on August 28, 2024 and sell it today you would lose (53.00) from holding Prudential Public Limited or give up 3.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Public Limited vs. China Life Insurance
Performance |
| Timeline |
| Prudential Public |
| China Life Insurance |
Prudential Public and China Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Public and China Life
The main advantage of trading using opposite Prudential Public and China Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Public 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.| Prudential Public vs. CNO Financial Group | Prudential Public vs. Jackson Financial | Prudential Public vs. MetLife Preferred Stock | Prudential Public vs. Jackson Financial |
| China Life vs. CNO Financial Group | China Life vs. Genworth Financial | China Life vs. MetLife Preferred Stock | China Life 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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