Correlation Between Chernan Metal and Pili International

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

By analyzing existing cross correlation between Chernan Metal Industrial and Pili International Multimedia, you can compare the effects of market volatilities on Chernan Metal and Pili International 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 Chernan Metal with a short position of Pili International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chernan Metal and Pili International.

Diversification Opportunities for Chernan Metal and Pili International

-0.23

Correlation Coefficient

Chernan Metal  Pili International

Very good diversification

The 3 months correlation between Chernan and Pili is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Chernan Metal Industrial and Pili International Multimedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pili International and Chernan Metal 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 Chernan Metal Industrial are associated (or correlated) with Pili International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pili International has no effect on the direction of Chernan Metal i.e., Chernan Metal and Pili International go up and down completely randomly.

Pair Corralation between Chernan Metal and Pili International

Assuming the 90 days trading horizon Chernan Metal Industrial is expected to generate 1.33 times more return on investment than Pili International. However, Chernan Metal is 1.33 times more volatile than Pili International Multimedia. It trades about 0.02 of its potential returns per unit of risk. Pili International Multimedia is currently generating about 0.01 per unit of risk. If you would invest  3,800  in Chernan Metal Industrial on December 5, 2024 and sell it today you would earn a total of  265.00  from holding Chernan Metal Industrial or generate 6.97% return on investment over 90 days.

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

Chernan Metal Industrial  vs.  Pili International Multimedia

Chernan Metal Industrial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chernan Metal Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chernan Metal is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pili International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pili International Multimedia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Pili International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chernan Metal and Pili International

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

The idea behind Chernan Metal Industrial and Pili International Multimedia 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.