Correlation Between Chengtun Mining and PKU HealthCare

Can any of the company-specific risk be diversified away by investing in both Chengtun Mining and PKU HealthCare 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 Chengtun Mining and PKU HealthCare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chengtun Mining Group and PKU HealthCare Corp, you can compare the effects of market volatilities on Chengtun Mining and PKU HealthCare 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 Chengtun Mining with a short position of PKU HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengtun Mining and PKU HealthCare.

Diversification Opportunities for Chengtun Mining and PKU HealthCare

0.31

Correlation Coefficient

Chengtun Mining  PKU HealthCare

Weak diversification

The 3 months correlation between Chengtun and PKU is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Chengtun Mining Group and PKU HealthCare Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PKU HealthCare Corp and Chengtun Mining 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 Chengtun Mining Group are associated (or correlated) with PKU HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PKU HealthCare Corp has no effect on the direction of Chengtun Mining i.e., Chengtun Mining and PKU HealthCare go up and down completely randomly.

Pair Corralation between Chengtun Mining and PKU HealthCare

Assuming the 90 days trading horizon Chengtun Mining Group is expected to under-perform the PKU HealthCare. In addition to that, Chengtun Mining is 1.06 times more volatile than PKU HealthCare Corp. It trades about -0.01 of its total potential returns per unit of risk. PKU HealthCare Corp is currently generating about 0.0 per unit of volatility. If you would invest  738.00  in PKU HealthCare Corp on October 10, 2024 and sell it today you would lose (113.00) from holding PKU HealthCare Corp or give up 15.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Chengtun Mining Group  vs.  PKU HealthCare Corp

Chengtun Mining Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chengtun Mining Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chengtun Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

PKU HealthCare Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PKU HealthCare Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PKU HealthCare may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Chengtun Mining and PKU HealthCare

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

The idea behind Chengtun Mining Group and PKU HealthCare Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.