Correlation Between Eugene Technology and PI Advanced

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

By analyzing existing cross correlation between Eugene Technology CoLtd and PI Advanced Materials, you can compare the effects of market volatilities on Eugene Technology and PI Advanced 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 Eugene Technology with a short position of PI Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eugene Technology and PI Advanced.

Diversification Opportunities for Eugene Technology and PI Advanced

0.72

Correlation Coefficient

Eugene Technology  PI Advanced

Poor diversification

The 3 months correlation between Eugene and 178920 is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Eugene Technology CoLtd and PI Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PI Advanced Materials and Eugene Technology 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 Eugene Technology CoLtd are associated (or correlated) with PI Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PI Advanced Materials has no effect on the direction of Eugene Technology i.e., Eugene Technology and PI Advanced go up and down completely randomly.

Pair Corralation between Eugene Technology and PI Advanced

Assuming the 90 days trading horizon Eugene Technology CoLtd is expected to generate 1.09 times more return on investment than PI Advanced. However, Eugene Technology is 1.09 times more volatile than PI Advanced Materials. It trades about 0.04 of its potential returns per unit of risk. PI Advanced Materials is currently generating about -0.02 per unit of risk. If you would invest  2,204,532  in Eugene Technology CoLtd on September 20, 2024 and sell it today you would earn a total of  1,195,468  from holding Eugene Technology CoLtd or generate 54.23% return on investment over 90 days.

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

Eugene Technology CoLtd  vs.  PI Advanced Materials

Eugene Technology CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eugene Technology CoLtd 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.

PI Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PI Advanced Materials 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 Eugene Technology and PI Advanced

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

The idea behind Eugene Technology CoLtd and PI Advanced Materials 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.