Correlation Between Ping An and China Pacific
Can any of the company-specific risk be diversified away by investing in both Ping An and China Pacific 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 Pacific 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 Pacific Insurance, you can compare the effects of market volatilities on Ping An and China Pacific 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 Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and China Pacific.
Diversification Opportunities for Ping An and China Pacific
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ping and China is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and China Pacific Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Pacific 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 Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Pacific Insurance has no effect on the direction of Ping An i.e., Ping An and China Pacific go up and down completely randomly.
Pair Corralation between Ping An and China Pacific
Assuming the 90 days horizon Ping An Insurance is expected to generate 0.79 times more return on investment than China Pacific. However, Ping An Insurance is 1.27 times less risky than China Pacific. It trades about 0.08 of its potential returns per unit of risk. China Pacific Insurance is currently generating about 0.06 per unit of risk. If you would invest 194.00 in Ping An Insurance on September 2, 2024 and sell it today you would earn a total of 345.00 from holding Ping An Insurance or generate 177.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ping An Insurance vs. China Pacific Insurance
Performance |
| Timeline |
| Ping An Insurance |
| China Pacific Insurance |
Ping An and China Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ping An and China Pacific
The main advantage of trading using opposite Ping An and China Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An position performs unexpectedly, China Pacific 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 Pacific will offset losses from the drop in China Pacific's long position.| Ping An vs. MTI WIRELESS EDGE | Ping An vs. CEOTRONICS | Ping An vs. Cogent Communications Holdings | Ping An vs. Waste Management |
| China Pacific vs. Silicon Motion Technology | China Pacific vs. PTT Global Chemical | China Pacific vs. GALENA MINING LTD | China Pacific vs. SEKISUI CHEMICAL |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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