Correlation Between Ping An and China Mobile
Can any of the company-specific risk be diversified away by investing in both Ping An and China Mobile 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 Mobile 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 Mobile 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 Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and China Mobile.
Diversification Opportunities for Ping An and China Mobile
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ping and China is 0.64. 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 Mobile. 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 Mobile go up and down completely randomly.
Pair Corralation between Ping An and China Mobile
Assuming the 90 days horizon Ping An Insurance is expected to under-perform the China Mobile. In addition to that, Ping An is 1.09 times more volatile than China Life Insurance. It trades about -0.06 of its total potential returns per unit of risk. China Life Insurance is currently generating about 0.06 per unit of volatility. If you would invest 171.00 in China Life Insurance on November 2, 2024 and sell it today you would earn a total of 3.00 from holding China Life Insurance or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ping An Insurance vs. China Life Insurance
Performance |
| Timeline |
| Ping An Insurance |
| China Life Insurance |
Ping An and China Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ping An and China Mobile
The main advantage of trading using opposite Ping An and China Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An position performs unexpectedly, China Mobile 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 Mobile will offset losses from the drop in China Mobile's long position.| Ping An vs. AIA Group Limited | Ping An vs. China Life Insurance | Ping An vs. MetLife | Ping An vs. Prudential plc |
| China Mobile vs. Ping An Insurance | China Mobile vs. AIA Group Limited | China Mobile vs. MetLife | China Mobile vs. Prudential plc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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