Correlation Between Prudential PLC and Ping An
Can any of the company-specific risk be diversified away by investing in both Prudential PLC and Ping An 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 PLC and Ping An into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential PLC ADR and Ping An Insurance, you can compare the effects of market volatilities on Prudential PLC and Ping An 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 PLC with a short position of Ping An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential PLC and Ping An.
Diversification Opportunities for Prudential PLC and Ping An
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Prudential and Ping is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Prudential PLC ADR and Ping An Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ping An Insurance and Prudential PLC 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 PLC ADR are associated (or correlated) with Ping An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ping An Insurance has no effect on the direction of Prudential PLC i.e., Prudential PLC and Ping An go up and down completely randomly.
Pair Corralation between Prudential PLC and Ping An
Considering the 90-day investment horizon Prudential PLC ADR is expected to generate 1.08 times more return on investment than Ping An. However, Prudential PLC is 1.08 times more volatile than Ping An Insurance. It trades about 0.35 of its potential returns per unit of risk. Ping An Insurance is currently generating about 0.3 per unit of risk. If you would invest 1,584 in Prudential PLC ADR on November 18, 2024 and sell it today you would earn a total of 247.00 from holding Prudential PLC ADR or generate 15.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential PLC ADR vs. Ping An Insurance
Performance |
| Timeline |
| Prudential PLC ADR |
| Ping An Insurance |
Prudential PLC and Ping An Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential PLC and Ping An
The main advantage of trading using opposite Prudential PLC and Ping An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential PLC position performs unexpectedly, Ping An 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 Ping An will offset losses from the drop in Ping An's long position.| Prudential PLC vs. CNO Financial Group | Prudential PLC vs. Jackson Financial | Prudential PLC vs. MetLife Preferred Stock | Prudential PLC vs. Jackson Financial |
| Ping An vs. AIA Group Ltd | Ping An vs. China Life Insurance | Ping An vs. Sanlam Ltd PK | Ping An vs. Lincoln National |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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