Correlation Between Peoples Insurance and China Eastern

Can any of the company-specific risk be diversified away by investing in both Peoples Insurance and China Eastern 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 Peoples Insurance and China Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Peoples Insurance of and China Eastern Airlines, you can compare the effects of market volatilities on Peoples Insurance and China Eastern 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 Peoples Insurance with a short position of China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peoples Insurance and China Eastern.

Diversification Opportunities for Peoples Insurance and China Eastern

0.57

Correlation Coefficient

Peoples Insurance  China Eastern

Very weak diversification

The 3 months correlation between Peoples and China is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Peoples Insurance of and China Eastern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Eastern Airlines and Peoples 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 Peoples Insurance of are associated (or correlated) with China Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Eastern Airlines has no effect on the direction of Peoples Insurance i.e., Peoples Insurance and China Eastern go up and down completely randomly.

Pair Corralation between Peoples Insurance and China Eastern

Assuming the 90 days trading horizon Peoples Insurance of is expected to generate 1.5 times more return on investment than China Eastern. However, Peoples Insurance is 1.5 times more volatile than China Eastern Airlines. It trades about 0.11 of its potential returns per unit of risk. China Eastern Airlines is currently generating about 0.09 per unit of risk. If you would invest  613.00  in Peoples Insurance of on September 2, 2024 and sell it today you would earn a total of  111.00  from holding Peoples Insurance of or generate 18.11% return on investment over 90 days.

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

Peoples Insurance of  vs.  China Eastern Airlines

Peoples Insurance

Risk-Adjusted Performance

8 of 100

OK

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

China Eastern Airlines

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Eastern Airlines are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Eastern may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Peoples Insurance and China Eastern

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

The idea behind Peoples Insurance of and China Eastern Airlines 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.