Correlation Between Pili International and Century Wind

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

By analyzing existing cross correlation between Pili International Multimedia and Century Wind Power, you can compare the effects of market volatilities on Pili International and Century Wind 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 Pili International with a short position of Century Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pili International and Century Wind.

Diversification Opportunities for Pili International and Century Wind

0.14

Correlation Coefficient

Pili International  Century Wind

Average diversification

The 3 months correlation between Pili and Century is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Pili International Multimedia and Century Wind Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Wind Power and Pili 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 Pili International Multimedia are associated (or correlated) with Century Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Wind Power has no effect on the direction of Pili International i.e., Pili International and Century Wind go up and down completely randomly.

Pair Corralation between Pili International and Century Wind

Assuming the 90 days trading horizon Pili International Multimedia is expected to under-perform the Century Wind. But the stock apears to be less risky and, when comparing its historical volatility, Pili International Multimedia is 2.91 times less risky than Century Wind. The stock trades about -0.12 of its potential returns per unit of risk. The Century Wind Power is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  28,950  in Century Wind Power on December 30, 2024 and sell it today you would lose (1,600) from holding Century Wind Power or give up 5.53% of portfolio value over 90 days.

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

Pili International Multimedia  vs.  Century Wind Power

Pili International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pili International Multimedia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Century Wind Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Century Wind Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Century Wind is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Pili International and Century Wind

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

The idea behind Pili International Multimedia and Century Wind Power 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.