Correlation Between Ping An and Techtronic Industries
Can any of the company-specific risk be diversified away by investing in both Ping An and Techtronic Industries 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 Techtronic Industries 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 Techtronic Industries, you can compare the effects of market volatilities on Ping An and Techtronic Industries 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 Techtronic Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and Techtronic Industries.
Diversification Opportunities for Ping An and Techtronic Industries
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ping and Techtronic is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Techtronic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techtronic Industries 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 Techtronic Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techtronic Industries has no effect on the direction of Ping An i.e., Ping An and Techtronic Industries go up and down completely randomly.
Pair Corralation between Ping An and Techtronic Industries
Assuming the 90 days trading horizon Ping An is expected to generate 1.18 times less return on investment than Techtronic Industries. In addition to that, Ping An is 1.22 times more volatile than Techtronic Industries. It trades about 0.04 of its total potential returns per unit of risk. Techtronic Industries is currently generating about 0.06 per unit of volatility. If you would invest 1,245 in Techtronic Industries on September 17, 2024 and sell it today you would earn a total of 31.00 from holding Techtronic Industries or generate 2.49% 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. Techtronic Industries
Performance |
| Timeline |
| Ping An Insurance |
| Techtronic Industries |
Ping An and Techtronic Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ping An and Techtronic Industries
The main advantage of trading using opposite Ping An and Techtronic Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An position performs unexpectedly, Techtronic Industries 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 Techtronic Industries will offset losses from the drop in Techtronic Industries' long position.| Ping An vs. EAST SIDE GAMES | Ping An vs. PLAYMATES TOYS | Ping An vs. International Game Technology | Ping An vs. QUEEN S ROAD |
| Techtronic Industries vs. INSURANCE AUST GRP | Techtronic Industries vs. LION ONE METALS | Techtronic Industries vs. Ping An Insurance | Techtronic Industries vs. MCEWEN MINING INC |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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