Correlation Between Pengxin International and Chison Medical

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

By analyzing existing cross correlation between Pengxin International Mining and Chison Medical Technologies, you can compare the effects of market volatilities on Pengxin International and Chison Medical 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 Pengxin International with a short position of Chison Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pengxin International and Chison Medical.

Diversification Opportunities for Pengxin International and Chison Medical

0.28

Correlation Coefficient

Pengxin International  Chison Medical

Modest diversification

The 3 months correlation between Pengxin and Chison is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Pengxin International Mining and Chison Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chison Medical Techn and Pengxin International 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 Pengxin International Mining are associated (or correlated) with Chison Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chison Medical Techn has no effect on the direction of Pengxin International i.e., Pengxin International and Chison Medical go up and down completely randomly.

Pair Corralation between Pengxin International and Chison Medical

Assuming the 90 days trading horizon Pengxin International is expected to generate 12.03 times less return on investment than Chison Medical. But when comparing it to its historical volatility, Pengxin International Mining is 1.28 times less risky than Chison Medical. It trades about 0.01 of its potential returns per unit of risk. Chison Medical Technologies is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,496  in Chison Medical Technologies on December 26, 2024 and sell it today you would earn a total of  617.00  from holding Chison Medical Technologies or generate 24.72% return on investment over 90 days.

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

Pengxin International Mining  vs.  Chison Medical Technologies

Pengxin International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pengxin International Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Pengxin International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Chison Medical Techn

Risk-Adjusted Performance

OK

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

Pair Trading with Pengxin International and Chison Medical

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

The idea behind Pengxin International Mining and Chison Medical Technologies 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.