Correlation Between Puyi and Diamond Hill

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Can any of the company-specific risk be diversified away by investing in both Puyi and Diamond Hill 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 Puyi and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Puyi Inc ADR and Diamond Hill Investment, you can compare the effects of market volatilities on Puyi and Diamond Hill 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 Puyi with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puyi and Diamond Hill.

Diversification Opportunities for Puyi and Diamond Hill

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Puyi and Diamond is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Puyi Inc ADR and Diamond Hill Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Investment and Puyi 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 Puyi Inc ADR are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Investment has no effect on the direction of Puyi i.e., Puyi and Diamond Hill go up and down completely randomly.

Pair Corralation between Puyi and Diamond Hill

If you would invest  15,522  in Diamond Hill Investment on September 1, 2024 and sell it today you would earn a total of  1,013  from holding Diamond Hill Investment or generate 6.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy1.59%
ValuesDaily Returns

Puyi Inc ADR  vs.  Diamond Hill Investment

 Performance 
       Timeline  
Puyi Inc ADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Puyi Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Puyi is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.
Diamond Hill Investment 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Hill Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating forward indicators, Diamond Hill may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Puyi and Diamond Hill Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Puyi and Diamond Hill

The main advantage of trading using opposite Puyi and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Puyi position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.
The idea behind Puyi Inc ADR and Diamond Hill Investment 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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