Correlation Between PKU HealthCare and Kontour Medical

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

Diversification Opportunities for PKU HealthCare and Kontour Medical

0.28

Correlation Coefficient

PKU HealthCare  Kontour Medical

Modest diversification

The 3 months correlation between PKU and Kontour is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding PKU HealthCare Corp and Kontour Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontour Medical Tech 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 Kontour Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontour Medical Tech has no effect on the direction of PKU HealthCare i.e., PKU HealthCare and Kontour Medical go up and down completely randomly.

Pair Corralation between PKU HealthCare and Kontour Medical

Assuming the 90 days trading horizon PKU HealthCare Corp is expected to under-perform the Kontour Medical. In addition to that, PKU HealthCare is 1.29 times more volatile than Kontour Medical Technology. It trades about -0.04 of its total potential returns per unit of risk. Kontour Medical Technology is currently generating about 0.07 per unit of volatility. If you would invest  2,729  in Kontour Medical Technology on October 26, 2024 and sell it today you would earn a total of  273.00  from holding Kontour Medical Technology or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

PKU HealthCare Corp  vs.  Kontour Medical Technology

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 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.

Kontour Medical Tech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kontour Medical Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kontour Medical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PKU HealthCare and Kontour Medical

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

The idea behind PKU HealthCare Corp and Kontour Medical 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .