Correlation Between PKU HealthCare and Contemporary Amperex

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

Diversification Opportunities for PKU HealthCare and Contemporary Amperex

0.63

Correlation Coefficient

PKU HealthCare  Contemporary Amperex

Poor diversification

The 3 months correlation between PKU and Contemporary is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding PKU HealthCare Corp and Contemporary Amperex Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contemporary Amperex 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 Contemporary Amperex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contemporary Amperex has no effect on the direction of PKU HealthCare i.e., PKU HealthCare and Contemporary Amperex go up and down completely randomly.

Pair Corralation between PKU HealthCare and Contemporary Amperex

Assuming the 90 days trading horizon PKU HealthCare Corp is expected to under-perform the Contemporary Amperex. In addition to that, PKU HealthCare is 2.3 times more volatile than Contemporary Amperex Technology. It trades about -0.07 of its total potential returns per unit of risk. Contemporary Amperex Technology is currently generating about 0.03 per unit of volatility. If you would invest  25,600  in Contemporary Amperex Technology on October 6, 2024 and sell it today you would earn a total of  163.00  from holding Contemporary Amperex Technology or generate 0.64% return on investment over 90 days.

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

PKU HealthCare Corp  vs.  Contemporary Amperex Technolog

PKU HealthCare Corp

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, PKU HealthCare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Contemporary Amperex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Contemporary Amperex Technology 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.

Pair Trading with PKU HealthCare and Contemporary Amperex

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

The idea behind PKU HealthCare Corp and Contemporary Amperex Technology 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.