Correlation Between Ping An and Jackson Financial

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

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

Diversification Opportunities for Ping An and Jackson Financial

0.29

Correlation Coefficient

Ping An  Jackson Financial

Modest diversification

The 3 months correlation between Ping and Jackson is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Jackson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Financial 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 Insurance are associated (or correlated) with Jackson Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackson Financial has no effect on the direction of Ping An i.e., Ping An and Jackson Financial go up and down completely randomly.

Pair Corralation between Ping An and Jackson Financial

Assuming the 90 days horizon Ping An Insurance is expected to generate 1.48 times more return on investment than Jackson Financial. However, Ping An is 1.48 times more volatile than Jackson Financial. It trades about 0.05 of its potential returns per unit of risk. Jackson Financial is currently generating about 0.01 per unit of risk. If you would invest  523.00  in Ping An Insurance on September 26, 2024 and sell it today you would earn a total of  42.00  from holding Ping An Insurance or generate 8.03% return on investment over 90 days.

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

Ping An Insurance  vs.  Jackson Financial

Ping An Insurance

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, Ping An reported solid returns over the last few months and may actually be approaching a breakup point.

Jackson Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jackson Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Jackson Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ping An and Jackson Financial

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

The idea behind Ping An Insurance and Jackson Financial 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.