Correlation Between Ping An and Gap
Can any of the company-specific risk be diversified away by investing in both Ping An and Gap 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 Gap 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 The Gap, you can compare the effects of market volatilities on Ping An and Gap 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 Gap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and Gap.
Diversification Opportunities for Ping An and Gap
Modest diversification
The 3 months correlation between Ping and Gap is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and The Gap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap 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 Gap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap has no effect on the direction of Ping An i.e., Ping An and Gap go up and down completely randomly.
Pair Corralation between Ping An and Gap
Assuming the 90 days trading horizon Ping An Insurance is expected to under-perform the Gap. But the stock apears to be less risky and, when comparing its historical volatility, Ping An Insurance is 2.11 times less risky than Gap. The stock trades about -0.05 of its potential returns per unit of risk. The The Gap is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,921 in The Gap on September 3, 2024 and sell it today you would earn a total of 559.00 from holding The Gap or generate 29.1% 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. The Gap
Performance |
| Timeline |
| Ping An Insurance |
| Gap |
Ping An and Gap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ping An and Gap
The main advantage of trading using opposite Ping An and Gap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An position performs unexpectedly, Gap 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 Gap will offset losses from the drop in Gap's 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 |
| Gap vs. COSTCO WHOLESALE CDR | Gap vs. AIR PRODCHEMICALS | Gap vs. Vastned Retail NV | Gap vs. FAST RETAIL ADR |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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