Correlation Between Ping An and MetLife

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

Diversification Opportunities for Ping An and MetLife

0.44

Correlation Coefficient

Ping An  MetLife

Very weak diversification

The 3 months correlation between Ping and MetLife is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife 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 MetLife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife has no effect on the direction of Ping An i.e., Ping An and MetLife go up and down completely randomly.

Pair Corralation between Ping An and MetLife

Assuming the 90 days horizon Ping An Insurance is expected to generate 3.5 times more return on investment than MetLife. However, Ping An is 3.5 times more volatile than MetLife. It trades about 0.03 of its potential returns per unit of risk. MetLife is currently generating about 0.03 per unit of risk. If you would invest  557.00  in Ping An Insurance on September 14, 2024 and sell it today you would earn a total of  35.00  from holding Ping An Insurance or generate 6.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.84%
Values	Daily Returns

Ping An Insurance  vs.  MetLife

Ping An Insurance

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Ping An reported solid returns over the last few months and may actually be approaching a breakup point.

MetLife

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MetLife are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, MetLife may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ping An and MetLife

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

The idea behind Ping An Insurance and MetLife 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.