Correlation Between Ping An and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both Ping An and Eagle Materials 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 Eagle Materials 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 Eagle Materials, you can compare the effects of market volatilities on Ping An and Eagle Materials 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 Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and Eagle Materials.
Diversification Opportunities for Ping An and Eagle Materials
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ping and Eagle is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials 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 Eagle Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Materials has no effect on the direction of Ping An i.e., Ping An and Eagle Materials go up and down completely randomly.
Pair Corralation between Ping An and Eagle Materials
Assuming the 90 days trading horizon Ping An Insurance is expected to generate 2.22 times more return on investment than Eagle Materials. However, Ping An is 2.22 times more volatile than Eagle Materials. It trades about 0.13 of its potential returns per unit of risk. Eagle Materials is currently generating about 0.07 per unit of risk. If you would invest 232.00 in Ping An Insurance on September 3, 2024 and sell it today you would earn a total of 308.00 from holding Ping An Insurance or generate 132.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ping An Insurance vs. Eagle Materials
Performance |
| Timeline |
| Ping An Insurance |
| Eagle Materials |
Ping An and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ping An and Eagle Materials
The main advantage of trading using opposite Ping An and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An position performs unexpectedly, Eagle Materials 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 Eagle Materials will offset losses from the drop in Eagle Materials' long position.| Ping An vs. LION ONE METALS | Ping An vs. IDP EDUCATION LTD | Ping An vs. DEVRY EDUCATION GRP | Ping An vs. Perseus Mining Limited |
| Eagle Materials vs. Vulcan Materials | Eagle Materials vs. Superior Plus Corp | Eagle Materials vs. NMI Holdings | Eagle Materials vs. Origin Agritech |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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