Correlation Between Applied Materials and PICC Property

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

By analyzing existing cross correlation between Applied Materials and PICC Property and, you can compare the effects of market volatilities on Applied Materials and PICC Property 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 Applied Materials with a short position of PICC Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and PICC Property.

Diversification Opportunities for Applied Materials and PICC Property

-0.3

Correlation Coefficient

Applied Materials  PICC Property

Very good diversification

The 3 months correlation between Applied and PICC is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and PICC Property and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PICC Property and Applied Materials 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 Applied Materials are associated (or correlated) with PICC Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PICC Property has no effect on the direction of Applied Materials i.e., Applied Materials and PICC Property go up and down completely randomly.

Pair Corralation between Applied Materials and PICC Property

Assuming the 90 days horizon Applied Materials is expected to under-perform the PICC Property. In addition to that, Applied Materials is 1.27 times more volatile than PICC Property and. It trades about -0.06 of its total potential returns per unit of risk. PICC Property and is currently generating about 0.13 per unit of volatility. If you would invest  147.00  in PICC Property and on December 20, 2024 and sell it today you would earn a total of  26.00  from holding PICC Property and or generate 17.69% return on investment over 90 days.

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

Applied Materials  vs.  PICC Property and

Applied Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PICC Property

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PICC Property and are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PICC Property reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Applied Materials and PICC Property

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

The idea behind Applied Materials and PICC Property and 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.