Correlation Between Olympic Circuit and Pengxin International

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

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

Diversification Opportunities for Olympic Circuit and Pengxin International

0.53

Correlation Coefficient

Olympic Circuit  Pengxin International

Very weak diversification

The 3 months correlation between Olympic and Pengxin is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Circuit Technology and Pengxin International Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pengxin International and Olympic Circuit 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 Olympic Circuit Technology are associated (or correlated) with Pengxin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pengxin International has no effect on the direction of Olympic Circuit i.e., Olympic Circuit and Pengxin International go up and down completely randomly.

Pair Corralation between Olympic Circuit and Pengxin International

Assuming the 90 days trading horizon Olympic Circuit Technology is expected to generate 0.94 times more return on investment than Pengxin International. However, Olympic Circuit Technology is 1.07 times less risky than Pengxin International. It trades about -0.01 of its potential returns per unit of risk. Pengxin International Mining is currently generating about -0.04 per unit of risk. If you would invest  2,980  in Olympic Circuit Technology on October 6, 2024 and sell it today you would lose (130.00) from holding Olympic Circuit Technology or give up 4.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.73%
Values	Daily Returns

Olympic Circuit Technology  vs.  Pengxin International Mining

Olympic Circuit Tech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Olympic Circuit Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Olympic Circuit may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pengxin International

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Olympic Circuit and Pengxin International

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

The idea behind Olympic Circuit Technology and Pengxin International Mining 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.