Correlation Between East Money and Piotech

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

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

Diversification Opportunities for East Money and Piotech

0.12

Correlation Coefficient

East Money  Piotech

Average diversification

The 3 months correlation between East and Piotech is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding East Money Information 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 East Money 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 East Money Information 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 East Money i.e., East Money and Piotech go up and down completely randomly.

Pair Corralation between East Money and Piotech

Assuming the 90 days trading horizon East Money Information is expected to under-perform the Piotech. But the stock apears to be less risky and, when comparing its historical volatility, East Money Information is 1.14 times less risky than Piotech. The stock trades about -0.07 of its potential returns per unit of risk. The Piotech Inc A is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  16,377  in Piotech Inc A on December 25, 2024 and sell it today you would earn a total of  988.00  from holding Piotech Inc A or generate 6.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

East Money Information  vs.  Piotech Inc A

East Money Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days East Money Information 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

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Piotech Inc A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Piotech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with East Money and Piotech

The main advantage of trading using opposite East Money and Piotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Money 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 East Money Information 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.

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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 .