Correlation Between Ping An and Newmont
Can any of the company-specific risk be diversified away by investing in both Ping An and Newmont 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 Newmont 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 Newmont, you can compare the effects of market volatilities on Ping An and Newmont 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 Newmont. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and Newmont.
Diversification Opportunities for Ping An and Newmont
Good diversification
The 3 months correlation between Ping and Newmont is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Newmont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont 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 Newmont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont has no effect on the direction of Ping An i.e., Ping An and Newmont go up and down completely randomly.
Pair Corralation between Ping An and Newmont
Assuming the 90 days trading horizon Ping An Insurance is expected to generate 1.7 times more return on investment than Newmont. However, Ping An is 1.7 times more volatile than Newmont. It trades about 0.12 of its potential returns per unit of risk. Newmont is currently generating about 0.03 per unit of risk. If you would invest 197.00 in Ping An Insurance on September 14, 2024 and sell it today you would earn a total of 381.00 from holding Ping An Insurance or generate 193.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ping An Insurance vs. Newmont
Performance |
| Timeline |
| Ping An Insurance |
| Newmont |
Ping An and Newmont Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ping An and Newmont
The main advantage of trading using opposite Ping An and Newmont positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An position performs unexpectedly, Newmont 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 Newmont will offset losses from the drop in Newmont's long position.The idea behind Ping An Insurance and Newmont 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.| Newmont vs. GFL ENVIRONM | Newmont vs. Khiron Life Sciences | Newmont vs. CosmoSteel Holdings Limited | Newmont vs. Tianjin Capital Environmental |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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