Correlation Between Ping An and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Ping An and Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical, you can compare the effects of market volatilities on Ping An and Quaker Chemical 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 Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and Quaker Chemical.
Diversification Opportunities for Ping An and Quaker Chemical
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ping and Quaker is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of Ping An i.e., Ping An and Quaker Chemical go up and down completely randomly.
Pair Corralation between Ping An and Quaker Chemical
Assuming the 90 days trading horizon Ping An Insurance is expected to generate 1.66 times more return on investment than Quaker Chemical. However, Ping An is 1.66 times more volatile than Quaker Chemical. It trades about -0.01 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.29 per unit of risk. If you would invest 565.00 in Ping An Insurance on September 21, 2024 and sell it today you would lose (8.00) from holding Ping An Insurance or give up 1.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ping An Insurance vs. Quaker Chemical
Performance |
| Timeline |
| Ping An Insurance |
| Quaker Chemical |
Ping An and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ping An and Quaker Chemical
The main advantage of trading using opposite Ping An and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.The idea behind Ping An Insurance and Quaker Chemical 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.| Quaker Chemical vs. The Hanover Insurance | Quaker Chemical vs. Reinsurance Group of | Quaker Chemical vs. Verizon Communications | Quaker Chemical vs. Ping An Insurance |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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