Correlation Between Chison Medical and Piotech

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

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

Diversification Opportunities for Chison Medical and Piotech

0.59

Correlation Coefficient

Chison Medical  Piotech

Very weak diversification

The 3 months correlation between Chison and Piotech is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Chison Medical Technologies and Piotech Inc A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piotech Inc A and Chison 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 Chison Medical Technologies are associated (or correlated) with Piotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piotech Inc A has no effect on the direction of Chison Medical i.e., Chison Medical and Piotech go up and down completely randomly.

Pair Corralation between Chison Medical and Piotech

Assuming the 90 days trading horizon Chison Medical is expected to generate 2.23 times less return on investment than Piotech. But when comparing it to its historical volatility, Chison Medical Technologies is 1.38 times less risky than Piotech. It trades about 0.02 of its potential returns per unit of risk. Piotech Inc A is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  13,978  in Piotech Inc A on October 11, 2024 and sell it today you would earn a total of  722.00  from holding Piotech Inc A or generate 5.17% return on investment over 90 days.

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

Chison Medical Technologies  vs.  Piotech Inc A

Chison Medical Techn

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chison Medical Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Chison Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Piotech Inc A

Risk-Adjusted Performance

3 of 100

Very Weak

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

Pair Trading with Chison Medical and Piotech

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

The idea behind Chison Medical Technologies and Piotech Inc A 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.