Correlation Between Peijia Medical and Geberit AG

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

Diversification Opportunities for Peijia Medical and Geberit AG

0.82

Correlation Coefficient

Peijia Medical  Geberit AG

Very poor diversification

The 3 months correlation between Peijia and Geberit is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Peijia Medical Limited and Geberit AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geberit AG 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 Geberit AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geberit AG has no effect on the direction of Peijia Medical i.e., Peijia Medical and Geberit AG go up and down completely randomly.

Pair Corralation between Peijia Medical and Geberit AG

Assuming the 90 days horizon Peijia Medical Limited is expected to generate 1.46 times more return on investment than Geberit AG. However, Peijia Medical is 1.46 times more volatile than Geberit AG. It trades about 0.11 of its potential returns per unit of risk. Geberit AG is currently generating about 0.07 per unit of risk. If you would invest  45.00  in Peijia Medical Limited on December 21, 2024 and sell it today you would earn a total of  11.00  from holding Peijia Medical Limited or generate 24.44% return on investment over 90 days.

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

Peijia Medical Limited  vs.  Geberit AG

Peijia Medical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Peijia Medical Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Peijia Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Geberit AG

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Geberit AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Geberit AG may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Peijia Medical and Geberit AG

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

The idea behind Peijia Medical Limited and Geberit AG 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.