Correlation Between Ping An and Great-West Lifeco

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

Diversification Opportunities for Ping An and Great-West Lifeco

-0.33

Correlation Coefficient

Ping An  Great-West Lifeco

Very good diversification

The 3 months correlation between Ping and Great-West is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Great West Lifeco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifeco 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 Great-West Lifeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifeco has no effect on the direction of Ping An i.e., Ping An and Great-West Lifeco go up and down completely randomly.

Pair Corralation between Ping An and Great-West Lifeco

Assuming the 90 days horizon Ping An Insurance is expected to generate 4.06 times more return on investment than Great-West Lifeco. However, Ping An is 4.06 times more volatile than Great West Lifeco. It trades about 0.07 of its potential returns per unit of risk. Great West Lifeco is currently generating about 0.0 per unit of risk. If you would invest  487.00  in Ping An Insurance on April 20, 2025 and sell it today you would earn a total of  84.00  from holding Ping An Insurance or generate 17.25% 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.  Great West Lifeco

Ping An Insurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ping An reported solid returns over the last few months and may actually be approaching a breakup point.

Great West Lifeco

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ping An and Great-West Lifeco

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

The idea behind Ping An Insurance and Great West Lifeco 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.