Correlation Between PAVmed Series and China Aircraft

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

By analyzing existing cross correlation between PAVmed Series Z and China Aircraft Leasing, you can compare the effects of market volatilities on PAVmed Series and China Aircraft 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 PAVmed Series with a short position of China Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of PAVmed Series and China Aircraft.

Diversification Opportunities for PAVmed Series and China Aircraft

0.49

Correlation Coefficient

PAVmed Series  China Aircraft

Very weak diversification

The 3 months correlation between PAVmed and China is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding PAVmed Series Z and China Aircraft Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Aircraft Leasing and PAVmed Series 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 PAVmed Series Z are associated (or correlated) with China Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Aircraft Leasing has no effect on the direction of PAVmed Series i.e., PAVmed Series and China Aircraft go up and down completely randomly.

Pair Corralation between PAVmed Series and China Aircraft

Assuming the 90 days horizon PAVmed Series Z is expected to generate 26.03 times more return on investment than China Aircraft. However, PAVmed Series is 26.03 times more volatile than China Aircraft Leasing. It trades about 0.13 of its potential returns per unit of risk. China Aircraft Leasing is currently generating about 0.08 per unit of risk. If you would invest  14.00  in PAVmed Series Z on October 3, 2024 and sell it today you would lose (13.01) from holding PAVmed Series Z or give up 92.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	68.62%
Values	Daily Returns

PAVmed Series Z  vs.  China Aircraft Leasing

PAVmed Series Z

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PAVmed Series Z are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, PAVmed Series showed solid returns over the last few months and may actually be approaching a breakup point.

China Aircraft Leasing

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PAVmed Series and China Aircraft

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

The idea behind PAVmed Series Z and China Aircraft Leasing 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.