Correlation Between Ping An and Sanlam

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

Diversification Opportunities for Ping An and Sanlam

-0.21

Correlation Coefficient

Ping An  Sanlam

Very good diversification

The 3 months correlation between Ping and Sanlam is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Sanlam Ltd PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanlam Ltd PK 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 Sanlam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanlam Ltd PK has no effect on the direction of Ping An i.e., Ping An and Sanlam go up and down completely randomly.

Pair Corralation between Ping An and Sanlam

Assuming the 90 days horizon Ping An Insurance is expected to generate 3.36 times more return on investment than Sanlam. However, Ping An is 3.36 times more volatile than Sanlam Ltd PK. It trades about 0.12 of its potential returns per unit of risk. Sanlam Ltd PK is currently generating about -0.07 per unit of risk. If you would invest  415.00  in Ping An Insurance on September 20, 2024 and sell it today you would earn a total of  150.00  from holding Ping An Insurance or generate 36.14% return on investment over 90 days.

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

Ping An Insurance  vs.  Sanlam Ltd PK

Ping An Insurance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 9 (%) 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.

Sanlam Ltd PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanlam Ltd PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Ping An and Sanlam

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

The idea behind Ping An Insurance and Sanlam Ltd PK 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.