Correlation Between PSB Holdings and Chongqing Rural

Can any of the company-specific risk be diversified away by investing in both PSB Holdings and Chongqing Rural 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 PSB Holdings and Chongqing Rural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PSB Holdings and Chongqing Rural Commercial, you can compare the effects of market volatilities on PSB Holdings and Chongqing Rural 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 PSB Holdings with a short position of Chongqing Rural. Check out your portfolio center. Please also check ongoing floating volatility patterns of PSB Holdings and Chongqing Rural.

Diversification Opportunities for PSB Holdings and Chongqing Rural

0.55

Correlation Coefficient

PSB Holdings  Chongqing Rural

Very weak diversification

The 3 months correlation between PSB and Chongqing is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding PSB Holdings and Chongqing Rural Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Rural Comm and PSB Holdings 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 PSB Holdings are associated (or correlated) with Chongqing Rural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Rural Comm has no effect on the direction of PSB Holdings i.e., PSB Holdings and Chongqing Rural go up and down completely randomly.

Pair Corralation between PSB Holdings and Chongqing Rural

If you would invest  2,592  in Chongqing Rural Commercial on December 20, 2024 and sell it today you would earn a total of  0.00  from holding Chongqing Rural Commercial or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

PSB Holdings  vs.  Chongqing Rural Commercial

PSB Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days PSB Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, PSB Holdings is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Chongqing Rural Comm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chongqing Rural Commercial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Chongqing Rural is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PSB Holdings and Chongqing Rural

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

The idea behind PSB Holdings and Chongqing Rural Commercial 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.