Correlation Between Anshan Senyuan and PKU HealthCare

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

By analyzing existing cross correlation between Anshan Senyuan Road and PKU HealthCare Corp, you can compare the effects of market volatilities on Anshan Senyuan and PKU HealthCare 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 Anshan Senyuan with a short position of PKU HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anshan Senyuan and PKU HealthCare.

Diversification Opportunities for Anshan Senyuan and PKU HealthCare

0.38

Correlation Coefficient

Anshan Senyuan  PKU HealthCare

Weak diversification

The 3 months correlation between Anshan and PKU is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Anshan Senyuan Road and PKU HealthCare Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PKU HealthCare Corp and Anshan Senyuan 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 Anshan Senyuan Road are associated (or correlated) with PKU HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PKU HealthCare Corp has no effect on the direction of Anshan Senyuan i.e., Anshan Senyuan and PKU HealthCare go up and down completely randomly.

Pair Corralation between Anshan Senyuan and PKU HealthCare

Assuming the 90 days trading horizon Anshan Senyuan Road is expected to generate 1.38 times more return on investment than PKU HealthCare. However, Anshan Senyuan is 1.38 times more volatile than PKU HealthCare Corp. It trades about 0.01 of its potential returns per unit of risk. PKU HealthCare Corp is currently generating about -0.1 per unit of risk. If you would invest  1,122  in Anshan Senyuan Road on December 23, 2024 and sell it today you would lose (16.00) from holding Anshan Senyuan Road or give up 1.43% of portfolio value over 90 days.

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

Anshan Senyuan Road  vs.  PKU HealthCare Corp

Anshan Senyuan Road

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anshan Senyuan Road has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Anshan Senyuan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PKU HealthCare Corp

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Anshan Senyuan and PKU HealthCare

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

The idea behind Anshan Senyuan Road and PKU HealthCare Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.