Correlation Between Ping An and Jiangsu Financial

Can any of the company-specific risk be diversified away by investing in both Ping An and Jiangsu Financial 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 Jiangsu Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ping An Bank and Jiangsu Financial Leasing, you can compare the effects of market volatilities on Ping An and Jiangsu Financial 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 Jiangsu Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and Jiangsu Financial.

Diversification Opportunities for Ping An and Jiangsu Financial

0.96

Correlation Coefficient

Ping An  Jiangsu Financial

Almost no diversification

The 3 months correlation between Ping and Jiangsu is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Bank and Jiangsu Financial Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Financial Leasing 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 Bank are associated (or correlated) with Jiangsu Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Financial Leasing has no effect on the direction of Ping An i.e., Ping An and Jiangsu Financial go up and down completely randomly.

Pair Corralation between Ping An and Jiangsu Financial

Assuming the 90 days trading horizon Ping An Bank is expected to generate 0.92 times more return on investment than Jiangsu Financial. However, Ping An Bank is 1.09 times less risky than Jiangsu Financial. It trades about 0.11 of its potential returns per unit of risk. Jiangsu Financial Leasing is currently generating about 0.08 per unit of risk. If you would invest  995.00  in Ping An Bank on August 30, 2024 and sell it today you would earn a total of  144.00  from holding Ping An Bank or generate 14.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Ping An Bank  vs.  Jiangsu Financial Leasing

Ping An Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ping An sustained solid returns over the last few months and may actually be approaching a breakup point.

Jiangsu Financial Leasing

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Financial Leasing are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Financial may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Ping An and Jiangsu Financial

The main advantage of trading using opposite Ping An and Jiangsu Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An position performs unexpectedly, Jiangsu Financial 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 Jiangsu Financial will offset losses from the drop in Jiangsu Financial's long position.

The idea behind Ping An Bank and Jiangsu Financial Leasing 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.

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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.