Correlation Between Ping An and VIRG NATL
Can any of the company-specific risk be diversified away by investing in both Ping An and VIRG NATL 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 VIRG NATL 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 VIRG NATL BANKSH, you can compare the effects of market volatilities on Ping An and VIRG NATL 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 VIRG NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and VIRG NATL.
Diversification Opportunities for Ping An and VIRG NATL
Weak diversification
The 3 months correlation between Ping and VIRG is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and VIRG NATL BANKSH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIRG NATL BANKSH 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 VIRG NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIRG NATL BANKSH has no effect on the direction of Ping An i.e., Ping An and VIRG NATL go up and down completely randomly.
Pair Corralation between Ping An and VIRG NATL
Assuming the 90 days trading horizon Ping An Insurance is expected to under-perform the VIRG NATL. But the stock apears to be less risky and, when comparing its historical volatility, Ping An Insurance is 1.02 times less risky than VIRG NATL. The stock trades about -0.05 of its potential returns per unit of risk. The VIRG NATL BANKSH is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,600 in VIRG NATL BANKSH on September 1, 2024 and sell it today you would earn a total of 320.00 from holding VIRG NATL BANKSH or generate 8.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ping An Insurance vs. VIRG NATL BANKSH
Performance |
| Timeline |
| Ping An Insurance |
| VIRG NATL BANKSH |
Ping An and VIRG NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ping An and VIRG NATL
The main advantage of trading using opposite Ping An and VIRG NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An position performs unexpectedly, VIRG NATL 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 VIRG NATL will offset losses from the drop in VIRG NATL's long position.| Ping An vs. Meiko Electronics Co | Ping An vs. North American Construction | Ping An vs. Sterling Construction | Ping An vs. UET United Electronic |
| VIRG NATL vs. Strategic Education | VIRG NATL vs. Verizon Communications | VIRG NATL vs. SK TELECOM TDADR | VIRG NATL vs. EEDUCATION ALBERT AB |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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