Correlation Between Penyao Environmental and Healthcare

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

By analyzing existing cross correlation between Penyao Environmental Protection and Healthcare Co, you can compare the effects of market volatilities on Penyao Environmental and 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 Penyao Environmental with a short position of Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penyao Environmental and Healthcare.

Diversification Opportunities for Penyao Environmental and Healthcare

0.61

Correlation Coefficient

Penyao Environmental  Healthcare

Poor diversification

The 3 months correlation between Penyao and Healthcare is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Penyao Environmental Protectio and Healthcare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare and Penyao Environmental 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 Penyao Environmental Protection are associated (or correlated) with Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare has no effect on the direction of Penyao Environmental i.e., Penyao Environmental and Healthcare go up and down completely randomly.

Pair Corralation between Penyao Environmental and Healthcare

Assuming the 90 days trading horizon Penyao Environmental Protection is expected to generate 0.98 times more return on investment than Healthcare. However, Penyao Environmental Protection is 1.02 times less risky than Healthcare. It trades about -0.11 of its potential returns per unit of risk. Healthcare Co is currently generating about -0.11 per unit of risk. If you would invest  609.00  in Penyao Environmental Protection on December 27, 2024 and sell it today you would lose (71.00) from holding Penyao Environmental Protection or give up 11.66% of portfolio value over 90 days.

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

Penyao Environmental Protectio  vs.  Healthcare Co

Penyao Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Penyao Environmental Protection 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.

Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Healthcare Co 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 Penyao Environmental and Healthcare

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

The idea behind Penyao Environmental Protection and Healthcare Co 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.