Correlation Between Pureun Mutual and Haitai Confectionery

Can any of the company-specific risk be diversified away by investing in both Pureun Mutual and Haitai Confectionery 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 Pureun Mutual and Haitai Confectionery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pureun Mutual Savings and Haitai Confectionery Foods, you can compare the effects of market volatilities on Pureun Mutual and Haitai Confectionery 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 Pureun Mutual with a short position of Haitai Confectionery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pureun Mutual and Haitai Confectionery.

Diversification Opportunities for Pureun Mutual and Haitai Confectionery

0.61

Correlation Coefficient

Pureun Mutual  Haitai Confectionery

Poor diversification

The 3 months correlation between Pureun and Haitai is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pureun Mutual Savings and Haitai Confectionery Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haitai Confectionery and Pureun Mutual 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 Pureun Mutual Savings are associated (or correlated) with Haitai Confectionery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haitai Confectionery has no effect on the direction of Pureun Mutual i.e., Pureun Mutual and Haitai Confectionery go up and down completely randomly.

Pair Corralation between Pureun Mutual and Haitai Confectionery

Assuming the 90 days trading horizon Pureun Mutual is expected to generate 2.19 times less return on investment than Haitai Confectionery. In addition to that, Pureun Mutual is 1.03 times more volatile than Haitai Confectionery Foods. It trades about 0.03 of its total potential returns per unit of risk. Haitai Confectionery Foods is currently generating about 0.08 per unit of volatility. If you would invest  580,000  in Haitai Confectionery Foods on September 28, 2024 and sell it today you would earn a total of  52,000  from holding Haitai Confectionery Foods or generate 8.97% return on investment over 90 days.

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

Pureun Mutual Savings  vs.  Haitai Confectionery Foods

Pureun Mutual Savings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pureun Mutual Savings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Pureun Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Haitai Confectionery

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Haitai Confectionery Foods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Haitai Confectionery may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pureun Mutual and Haitai Confectionery

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

The idea behind Pureun Mutual Savings and Haitai Confectionery Foods 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..