Correlation Between Peijia Medical and Elis SA

Can any of the company-specific risk be diversified away by investing in both Peijia Medical and Elis SA 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 Elis SA 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 Elis SA, you can compare the effects of market volatilities on Peijia Medical and Elis SA 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 Elis SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peijia Medical and Elis SA.

Diversification Opportunities for Peijia Medical and Elis SA

0.57

Correlation Coefficient

Peijia Medical  Elis SA

Very weak diversification

The 3 months correlation between Peijia and Elis is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Peijia Medical Limited and Elis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elis SA 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 Elis SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elis SA has no effect on the direction of Peijia Medical i.e., Peijia Medical and Elis SA go up and down completely randomly.

Pair Corralation between Peijia Medical and Elis SA

Assuming the 90 days horizon Peijia Medical is expected to generate 1.05 times less return on investment than Elis SA. In addition to that, Peijia Medical is 1.89 times more volatile than Elis SA. It trades about 0.1 of its total potential returns per unit of risk. Elis SA is currently generating about 0.19 per unit of volatility. If you would invest  1,815  in Elis SA on December 20, 2024 and sell it today you would earn a total of  401.00  from holding Elis SA or generate 22.09% return on investment over 90 days.

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

Peijia Medical Limited  vs.  Elis SA

Peijia Medical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Peijia Medical Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Peijia Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Elis SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elis SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Elis SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Peijia Medical and Elis SA

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

The idea behind Peijia Medical Limited and Elis SA 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.