Correlation Between PKU HealthCare and Guangzhou Jinyi

Can any of the company-specific risk be diversified away by investing in both PKU HealthCare and Guangzhou Jinyi 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 PKU HealthCare and Guangzhou Jinyi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PKU HealthCare Corp and Guangzhou Jinyi Media, you can compare the effects of market volatilities on PKU HealthCare and Guangzhou Jinyi 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 PKU HealthCare with a short position of Guangzhou Jinyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of PKU HealthCare and Guangzhou Jinyi.

Diversification Opportunities for PKU HealthCare and Guangzhou Jinyi

0.24

Correlation Coefficient

PKU HealthCare  Guangzhou Jinyi

Modest diversification

The 3 months correlation between PKU and Guangzhou is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding PKU HealthCare Corp and Guangzhou Jinyi Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Jinyi Media and PKU HealthCare 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 PKU HealthCare Corp are associated (or correlated) with Guangzhou Jinyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Jinyi Media has no effect on the direction of PKU HealthCare i.e., PKU HealthCare and Guangzhou Jinyi go up and down completely randomly.

Pair Corralation between PKU HealthCare and Guangzhou Jinyi

Assuming the 90 days trading horizon PKU HealthCare Corp is expected to under-perform the Guangzhou Jinyi. But the stock apears to be less risky and, when comparing its historical volatility, PKU HealthCare Corp is 1.89 times less risky than Guangzhou Jinyi. The stock trades about -0.06 of its potential returns per unit of risk. The Guangzhou Jinyi Media is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  803.00  in Guangzhou Jinyi Media on December 30, 2024 and sell it today you would lose (41.00) from holding Guangzhou Jinyi Media or give up 5.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PKU HealthCare Corp  vs.  Guangzhou Jinyi Media

PKU HealthCare Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days PKU HealthCare Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Guangzhou Jinyi Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guangzhou Jinyi Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Guangzhou Jinyi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PKU HealthCare and Guangzhou Jinyi

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

The idea behind PKU HealthCare Corp and Guangzhou Jinyi Media 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.