Correlation Between Ping An and Manulife Financial

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

Diversification Opportunities for Ping An and Manulife Financial

-0.11

Correlation Coefficient

Ping An  Manulife Financial

Good diversification

The 3 months correlation between Ping and Manulife is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Manulife Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife 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 Manulife Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Financial has no effect on the direction of Ping An i.e., Ping An and Manulife Financial go up and down completely randomly.

Pair Corralation between Ping An and Manulife Financial

Assuming the 90 days horizon Ping An Insurance is expected to generate 4.91 times more return on investment than Manulife Financial. However, Ping An is 4.91 times more volatile than Manulife Financial. It trades about 0.12 of its potential returns per unit of risk. Manulife Financial is currently generating about -0.1 per unit of risk. If you would invest  901.00  in Ping An Insurance on September 14, 2024 and sell it today you would earn a total of  304.00  from holding Ping An Insurance or generate 33.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Ping An Insurance  vs.  Manulife Financial

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. In spite of fairly unfluctuating basic indicators, Ping An showed solid returns over the last few months and may actually be approaching a breakup point.

Manulife Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manulife Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Manulife Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ping An and Manulife Financial

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

The idea behind Ping An Insurance and Manulife 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.