Correlation Between Selective Insurance and Ping An
Can any of the company-specific risk be diversified away by investing in both Selective Insurance and Ping An 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 Selective Insurance and Ping An into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Selective Insurance Group and Ping An Insurance, you can compare the effects of market volatilities on Selective Insurance and Ping An 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 Selective Insurance with a short position of Ping An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and Ping An.
Diversification Opportunities for Selective Insurance and Ping An
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Selective and Ping is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and Ping An Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ping An Insurance and Selective Insurance 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 Selective Insurance Group are associated (or correlated) with Ping An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ping An Insurance has no effect on the direction of Selective Insurance i.e., Selective Insurance and Ping An go up and down completely randomly.
Pair Corralation between Selective Insurance and Ping An
Assuming the 90 days horizon Selective Insurance Group is expected to generate 0.81 times more return on investment than Ping An. However, Selective Insurance Group is 1.23 times less risky than Ping An. It trades about 0.08 of its potential returns per unit of risk. Ping An Insurance is currently generating about -0.04 per unit of risk. If you would invest 8,565 in Selective Insurance Group on August 24, 2024 and sell it today you would earn a total of 285.00 from holding Selective Insurance Group or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Selective Insurance Group vs. Ping An Insurance
Performance |
| Timeline |
| Selective Insurance |
| Ping An Insurance |
Selective Insurance and Ping An Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selective Insurance and Ping An
The main advantage of trading using opposite Selective Insurance and Ping An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective Insurance position performs unexpectedly, Ping An 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 Ping An will offset losses from the drop in Ping An's long position.| Selective Insurance vs. QBE Insurance Group | Selective Insurance vs. Insurance Australia Group | Selective Insurance vs. Superior Plus Corp | Selective Insurance vs. NMI Holdings |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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