Correlation Between Ping An and Walmart
Can any of the company-specific risk be diversified away by investing in both Ping An and Walmart 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 Walmart 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 Walmart, you can compare the effects of market volatilities on Ping An and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and Walmart.
Diversification Opportunities for Ping An and Walmart
Very weak diversification
The 3 months correlation between Ping and Walmart is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Ping An i.e., Ping An and Walmart go up and down completely randomly.
Pair Corralation between Ping An and Walmart
Assuming the 90 days trading horizon Ping An Insurance is expected to generate 3.54 times more return on investment than Walmart. However, Ping An is 3.54 times more volatile than Walmart. It trades about 0.08 of its potential returns per unit of risk. Walmart is currently generating about 0.17 per unit of risk. If you would invest 254.00 in Ping An Insurance on September 1, 2024 and sell it today you would earn a total of 286.00 from holding Ping An Insurance or generate 112.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.64% |
| Values | Daily Returns |
Ping An Insurance vs. Walmart
Performance |
| Timeline |
| Ping An Insurance |
| Walmart |
Ping An and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ping An and Walmart
The main advantage of trading using opposite Ping An and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.| Ping An vs. Meiko Electronics Co | Ping An vs. North American Construction | Ping An vs. Sterling Construction | Ping An vs. UET United Electronic |
| Walmart vs. DELTA AIR LINES | Walmart vs. Spirent Communications plc | Walmart vs. Fair Isaac Corp | Walmart vs. Alaska Air Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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