Correlation Between ROPEOK Technology and Penyao Environmental

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

By analyzing existing cross correlation between ROPEOK Technology Group and Penyao Environmental Protection, you can compare the effects of market volatilities on ROPEOK Technology and Penyao Environmental 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 ROPEOK Technology with a short position of Penyao Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of ROPEOK Technology and Penyao Environmental.

Diversification Opportunities for ROPEOK Technology and Penyao Environmental

0.7

Correlation Coefficient

ROPEOK Technology  Penyao Environmental

Poor diversification

The 3 months correlation between ROPEOK and Penyao is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding ROPEOK Technology Group and Penyao Environmental Protectio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penyao Environmental and ROPEOK Technology 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 ROPEOK Technology Group are associated (or correlated) with Penyao Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penyao Environmental has no effect on the direction of ROPEOK Technology i.e., ROPEOK Technology and Penyao Environmental go up and down completely randomly.

Pair Corralation between ROPEOK Technology and Penyao Environmental

Assuming the 90 days trading horizon ROPEOK Technology Group is expected to under-perform the Penyao Environmental. In addition to that, ROPEOK Technology is 1.09 times more volatile than Penyao Environmental Protection. It trades about -0.25 of its total potential returns per unit of risk. Penyao Environmental Protection is currently generating about -0.14 per unit of volatility. If you would invest  595.00  in Penyao Environmental Protection on October 6, 2024 and sell it today you would lose (60.00) from holding Penyao Environmental Protection or give up 10.08% of portfolio value over 90 days.

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

ROPEOK Technology Group  vs.  Penyao Environmental Protectio

ROPEOK Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ROPEOK Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Penyao Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ROPEOK Technology and Penyao Environmental

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

The idea behind ROPEOK Technology Group and Penyao Environmental Protection 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.