Correlation Between American Equity and China Life
Can any of the company-specific risk be diversified away by investing in both American Equity and China Life 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 American Equity and China Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Equity Investment and China Life Insurance, you can compare the effects of market volatilities on American Equity and China Life 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 American Equity with a short position of China Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Equity and China Life.
Diversification Opportunities for American Equity and China Life
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Equity Investment and China Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Life Insurance and American Equity 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 American Equity Investment are associated (or correlated) with China Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Life Insurance has no effect on the direction of American Equity i.e., American Equity and China Life go up and down completely randomly.
Pair Corralation between American Equity and China Life
If you would invest (100.00) in China Life Insurance on January 20, 2024 and sell it today you would earn a total of 100.00 from holding China Life Insurance or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
American Equity Investment vs. China Life Insurance
Performance |
| Timeline |
| American Equity Inve |
| China Life Insurance |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Equity and China Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Equity and China Life
The main advantage of trading using opposite American Equity and China Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Equity position performs unexpectedly, China Life 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 China Life will offset losses from the drop in China Life's long position.| American Equity vs. MetLife Preferred Stock | American Equity vs. National Western Life | American Equity vs. Prudential Public Limited | American Equity vs. MetLife Preferred Stock |
| China Life vs. Oatly Group AB | China Life vs. Highway Holdings Limited | China Life vs. The Coca Cola | China Life vs. Avarone Metals |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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