Correlation Between Lander Sports and PKU HealthCare

Can any of the company-specific risk be diversified away by investing in both Lander Sports and PKU HealthCare 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 Lander Sports and PKU HealthCare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lander Sports Development and PKU HealthCare Corp, you can compare the effects of market volatilities on Lander Sports and PKU HealthCare 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 Lander Sports with a short position of PKU HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lander Sports and PKU HealthCare.

Diversification Opportunities for Lander Sports and PKU HealthCare

0.97

Correlation Coefficient

Lander Sports  PKU HealthCare

Almost no diversification

The 3 months correlation between Lander and PKU is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Lander Sports Development and PKU HealthCare Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PKU HealthCare Corp and Lander Sports 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 Lander Sports Development are associated (or correlated) with PKU HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PKU HealthCare Corp has no effect on the direction of Lander Sports i.e., Lander Sports and PKU HealthCare go up and down completely randomly.

Pair Corralation between Lander Sports and PKU HealthCare

Assuming the 90 days trading horizon Lander Sports is expected to generate 1.05 times less return on investment than PKU HealthCare. In addition to that, Lander Sports is 1.15 times more volatile than PKU HealthCare Corp. It trades about 0.11 of its total potential returns per unit of risk. PKU HealthCare Corp is currently generating about 0.14 per unit of volatility. If you would invest  620.00  in PKU HealthCare Corp on September 4, 2024 and sell it today you would earn a total of  38.00  from holding PKU HealthCare Corp or generate 6.13% return on investment over 90 days.

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

Lander Sports Development  vs.  PKU HealthCare Corp

Lander Sports Development

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lander Sports Development are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lander Sports sustained solid returns over the last few months and may actually be approaching a breakup point.

PKU HealthCare Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PKU HealthCare Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PKU HealthCare sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lander Sports and PKU HealthCare

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

The idea behind Lander Sports Development and PKU HealthCare Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.