Correlation Between Peace Living and Assetwise Public

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

By analyzing existing cross correlation between Peace Living PCL and Assetwise Public, you can compare the effects of market volatilities on Peace Living and Assetwise Public 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 Peace Living with a short position of Assetwise Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peace Living and Assetwise Public.

Diversification Opportunities for Peace Living and Assetwise Public

-0.52

Correlation Coefficient

Peace Living  Assetwise Public

Excellent diversification

The 3 months correlation between Peace and Assetwise is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Peace Living PCL and Assetwise Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assetwise Public and Peace Living 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 Peace Living PCL are associated (or correlated) with Assetwise Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assetwise Public has no effect on the direction of Peace Living i.e., Peace Living and Assetwise Public go up and down completely randomly.

Pair Corralation between Peace Living and Assetwise Public

Assuming the 90 days trading horizon Peace Living PCL is expected to under-perform the Assetwise Public. But the stock apears to be less risky and, when comparing its historical volatility, Peace Living PCL is 1.09 times less risky than Assetwise Public. The stock trades about -0.12 of its potential returns per unit of risk. The Assetwise Public is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  765.00  in Assetwise Public on September 3, 2024 and sell it today you would earn a total of  40.00  from holding Assetwise Public or generate 5.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Peace Living PCL  vs.  Assetwise Public

Peace Living PCL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Assetwise Public

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Assetwise Public are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Assetwise Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Peace Living and Assetwise Public

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

The idea behind Peace Living PCL and Assetwise Public 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .