Correlation Between Seven West and Ping An
Can any of the company-specific risk be diversified away by investing in both Seven West 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 Seven West and Ping An into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven West Media and Ping An Insurance, you can compare the effects of market volatilities on Seven West 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 Seven West with a short position of Ping An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and Ping An.
Diversification Opportunities for Seven West and Ping An
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Seven and Ping is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media 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 Seven West 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 Seven West Media 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 Seven West i.e., Seven West and Ping An go up and down completely randomly.
Pair Corralation between Seven West and Ping An
Assuming the 90 days horizon Seven West Media is expected to generate 2.72 times more return on investment than Ping An. However, Seven West is 2.72 times more volatile than Ping An Insurance. It trades about 0.11 of its potential returns per unit of risk. Ping An Insurance is currently generating about -0.23 per unit of risk. If you would invest 8.05 in Seven West Media on October 24, 2024 and sell it today you would earn a total of 0.60 from holding Seven West Media or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seven West Media vs. Ping An Insurance
Performance |
| Timeline |
| Seven West Media |
| Ping An Insurance |
Seven West and Ping An Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seven West and Ping An
The main advantage of trading using opposite Seven West and Ping An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West 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.| Seven West vs. American Airlines Group | Seven West vs. Apollo Investment Corp | Seven West vs. AEGEAN AIRLINES | Seven West vs. International Consolidated Airlines |
| Ping An vs. Sterling Construction | Ping An vs. Park Hotels Resorts | Ping An vs. North American Construction | Ping An vs. Sumitomo Mitsui Construction |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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