Correlation Between Ping An and Apple
Can any of the company-specific risk be diversified away by investing in both Ping An and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on Ping An and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and Apple.
Diversification Opportunities for Ping An and Apple
Very weak diversification
The 3 months correlation between Ping and Apple is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Ping An i.e., Ping An and Apple go up and down completely randomly.
Pair Corralation between Ping An and Apple
Assuming the 90 days trading horizon Ping An Insurance is expected to under-perform the Apple. In addition to that, Ping An is 2.18 times more volatile than Apple Inc. It trades about -0.09 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.14 per unit of volatility. If you would invest 21,245 in Apple Inc on August 25, 2024 and sell it today you would earn a total of 830.00 from holding Apple Inc or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ping An Insurance vs. Apple Inc
Performance |
| Timeline |
| Ping An Insurance |
| Apple Inc |
Ping An and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ping An and Apple
The main advantage of trading using opposite Ping An and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.The idea behind Ping An Insurance and Apple Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Apple vs. FUYO GENERAL LEASE | Apple vs. United Rentals | Apple vs. Qurate Retail Series | Apple vs. National Retail Properties |
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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