Correlation Between SOLSTAD OFFSHORE and Peijia Medical

Can any of the company-specific risk be diversified away by investing in both SOLSTAD OFFSHORE and Peijia Medical 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 SOLSTAD OFFSHORE and Peijia Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SOLSTAD OFFSHORE NK and Peijia Medical Limited, you can compare the effects of market volatilities on SOLSTAD OFFSHORE and Peijia Medical 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 SOLSTAD OFFSHORE with a short position of Peijia Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOLSTAD OFFSHORE and Peijia Medical.

Diversification Opportunities for SOLSTAD OFFSHORE and Peijia Medical

0.04

Correlation Coefficient

SOLSTAD OFFSHORE  Peijia Medical

Significant diversification

The 3 months correlation between SOLSTAD and Peijia is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SOLSTAD OFFSHORE NK and Peijia Medical Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peijia Medical and SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE NK are associated (or correlated) with Peijia Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peijia Medical has no effect on the direction of SOLSTAD OFFSHORE i.e., SOLSTAD OFFSHORE and Peijia Medical go up and down completely randomly.

Pair Corralation between SOLSTAD OFFSHORE and Peijia Medical

Assuming the 90 days horizon SOLSTAD OFFSHORE NK is expected to generate 1.21 times more return on investment than Peijia Medical. However, SOLSTAD OFFSHORE is 1.21 times more volatile than Peijia Medical Limited. It trades about 0.07 of its potential returns per unit of risk. Peijia Medical Limited is currently generating about 0.01 per unit of risk. If you would invest  339.00  in SOLSTAD OFFSHORE NK on October 9, 2024 and sell it today you would earn a total of  10.00  from holding SOLSTAD OFFSHORE NK or generate 2.95% return on investment over 90 days.

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

SOLSTAD OFFSHORE NK  vs.  Peijia Medical Limited

SOLSTAD OFFSHORE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SOLSTAD OFFSHORE NK are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SOLSTAD OFFSHORE reported solid returns over the last few months and may actually be approaching a breakup point.

Peijia Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Peijia Medical Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Peijia Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SOLSTAD OFFSHORE and Peijia Medical

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

The idea behind SOLSTAD OFFSHORE NK and Peijia Medical Limited 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..