Correlation Between Peoples Insurance and Heilongjiang Transport

Can any of the company-specific risk be diversified away by investing in both Peoples Insurance and Heilongjiang Transport 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 Heilongjiang Transport 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 Heilongjiang Transport Development, you can compare the effects of market volatilities on Peoples Insurance and Heilongjiang Transport 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 Heilongjiang Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peoples Insurance and Heilongjiang Transport.

Diversification Opportunities for Peoples Insurance and Heilongjiang Transport

0.69

Correlation Coefficient

Peoples Insurance  Heilongjiang Transport

Poor diversification

The 3 months correlation between Peoples and Heilongjiang is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Peoples Insurance of and Heilongjiang Transport Develop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heilongjiang Transport 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 Heilongjiang Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heilongjiang Transport has no effect on the direction of Peoples Insurance i.e., Peoples Insurance and Heilongjiang Transport go up and down completely randomly.

Pair Corralation between Peoples Insurance and Heilongjiang Transport

Assuming the 90 days trading horizon Peoples Insurance of is expected to generate 0.7 times more return on investment than Heilongjiang Transport. However, Peoples Insurance of is 1.42 times less risky than Heilongjiang Transport. It trades about 0.15 of its potential returns per unit of risk. Heilongjiang Transport Development is currently generating about 0.07 per unit of risk. If you would invest  524.00  in Peoples Insurance of on September 29, 2024 and sell it today you would earn a total of  243.00  from holding Peoples Insurance of or generate 46.37% return on investment over 90 days.

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

Peoples Insurance of  vs.  Heilongjiang Transport Develop

Peoples Insurance

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Peoples Insurance of are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Peoples Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Heilongjiang Transport

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Heilongjiang Transport Development are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Heilongjiang Transport is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Peoples Insurance and Heilongjiang Transport

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

The idea behind Peoples Insurance of and Heilongjiang Transport Development 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.