Correlation Between Ping An and Gold Road

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Can any of the company-specific risk be diversified away by investing in both Ping An and Gold Road 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 Gold Road 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 Gold Road Resources, you can compare the effects of market volatilities on Ping An and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and Gold Road.

Diversification Opportunities for Ping An and Gold Road

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ping and Gold is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Ping An i.e., Ping An and Gold Road go up and down completely randomly.

Pair Corralation between Ping An and Gold Road

Assuming the 90 days trading horizon Ping An Insurance is expected to generate 2.21 times more return on investment than Gold Road. However, Ping An is 2.21 times more volatile than Gold Road Resources. It trades about 0.14 of its potential returns per unit of risk. Gold Road Resources is currently generating about 0.08 per unit of risk. If you would invest  244.00  in Ping An Insurance on September 3, 2024 and sell it today you would earn a total of  300.00  from holding Ping An Insurance or generate 122.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ping An Insurance  vs.  Gold Road Resources

 Performance 
       Timeline  
Ping An Insurance 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ping An unveiled solid returns over the last few months and may actually be approaching a breakup point.
Gold Road Resources 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Gold Road Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gold Road reported solid returns over the last few months and may actually be approaching a breakup point.

Ping An and Gold Road Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ping An and Gold Road

The main advantage of trading using opposite Ping An and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.
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The idea behind Ping An Insurance and Gold Road Resources 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.
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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