Correlation Between Runjian Communication and Piotech

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

By analyzing existing cross correlation between Runjian Communication Co and Piotech Inc A, you can compare the effects of market volatilities on Runjian Communication and Piotech 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 Runjian Communication with a short position of Piotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Runjian Communication and Piotech.

Diversification Opportunities for Runjian Communication and Piotech

0.04

Correlation Coefficient

Runjian Communication  Piotech

Significant diversification

The 3 months correlation between Runjian and Piotech is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Runjian Communication Co and Piotech Inc A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piotech Inc A and Runjian Communication 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 Runjian Communication Co are associated (or correlated) with Piotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piotech Inc A has no effect on the direction of Runjian Communication i.e., Runjian Communication and Piotech go up and down completely randomly.

Pair Corralation between Runjian Communication and Piotech

Assuming the 90 days trading horizon Runjian Communication Co is expected to under-perform the Piotech. But the stock apears to be less risky and, when comparing its historical volatility, Runjian Communication Co is 1.28 times less risky than Piotech. The stock trades about -0.01 of its potential returns per unit of risk. The Piotech Inc A is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  16,150  in Piotech Inc A on October 5, 2024 and sell it today you would lose (1,480) from holding Piotech Inc A or give up 9.16% of portfolio value over 90 days.

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

Runjian Communication Co  vs.  Piotech Inc A

Runjian Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Runjian Communication Co 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.

Piotech Inc A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Piotech Inc A 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 Runjian Communication and Piotech

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

The idea behind Runjian Communication Co and Piotech Inc A 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.