Correlation Between Peijia Medical and Western Copper

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

By analyzing existing cross correlation between Peijia Medical Limited and Western Copper and, you can compare the effects of market volatilities on Peijia Medical and Western Copper 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 Peijia Medical with a short position of Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peijia Medical and Western Copper.

Diversification Opportunities for Peijia Medical and Western Copper

0.13

Correlation Coefficient

Peijia Medical  Western Copper

Average diversification

The 3 months correlation between Peijia and Western is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Peijia Medical Limited and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and Peijia Medical 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 Peijia Medical Limited are associated (or correlated) with Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of Peijia Medical i.e., Peijia Medical and Western Copper go up and down completely randomly.

Pair Corralation between Peijia Medical and Western Copper

Assuming the 90 days horizon Peijia Medical Limited is expected to under-perform the Western Copper. But the stock apears to be less risky and, when comparing its historical volatility, Peijia Medical Limited is 1.23 times less risky than Western Copper. The stock trades about -0.1 of its potential returns per unit of risk. The Western Copper and is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  97.00  in Western Copper and on October 22, 2024 and sell it today you would lose (2.00) from holding Western Copper and or give up 2.06% of portfolio value over 90 days.

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

Peijia Medical Limited  vs.  Western Copper and

Peijia Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Peijia Medical Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Peijia Medical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Western Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Copper and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Peijia Medical and Western Copper

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

The idea behind Peijia Medical Limited and Western Copper and 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.