Correlation Between Ping An and American Equity

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

Diversification Opportunities for Ping An and American Equity

0.22

Correlation Coefficient

Ping An  American Equity

Modest diversification

The 3 months correlation between Ping and American is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and American Equity Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Equity Inve 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 American Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Equity Inve has no effect on the direction of Ping An i.e., Ping An and American Equity go up and down completely randomly.

Pair Corralation between Ping An and American Equity

If you would invest  923.00  in Ping An Insurance on September 5, 2024 and sell it today you would earn a total of  250.00  from holding Ping An Insurance or generate 27.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.8%
Values	Daily Returns

Ping An Insurance  vs.  American Equity Investment

Ping An Insurance

Risk-Adjusted Performance

8 of 100

OK

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

American Equity Inve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Equity Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, American Equity is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ping An and American Equity

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

The idea behind Ping An Insurance and American Equity Investment 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.