Correlation Between Penyao Environmental and RoadMain T

Can any of the company-specific risk be diversified away by investing in both Penyao Environmental and RoadMain T 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 Penyao Environmental and RoadMain T into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Penyao Environmental Protection and RoadMain T Co, you can compare the effects of market volatilities on Penyao Environmental and RoadMain T 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 Penyao Environmental with a short position of RoadMain T. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penyao Environmental and RoadMain T.

Diversification Opportunities for Penyao Environmental and RoadMain T

0.69

Correlation Coefficient

Penyao Environmental  RoadMain T

Poor diversification

The 3 months correlation between Penyao and RoadMain is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Penyao Environmental Protectio and RoadMain T Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RoadMain T and Penyao Environmental 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 Penyao Environmental Protection are associated (or correlated) with RoadMain T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RoadMain T has no effect on the direction of Penyao Environmental i.e., Penyao Environmental and RoadMain T go up and down completely randomly.

Pair Corralation between Penyao Environmental and RoadMain T

Assuming the 90 days trading horizon Penyao Environmental Protection is expected to generate 1.21 times more return on investment than RoadMain T. However, Penyao Environmental is 1.21 times more volatile than RoadMain T Co. It trades about 0.18 of its potential returns per unit of risk. RoadMain T Co is currently generating about 0.14 per unit of risk. If you would invest  406.00  in Penyao Environmental Protection on September 12, 2024 and sell it today you would earn a total of  186.00  from holding Penyao Environmental Protection or generate 45.81% return on investment over 90 days.

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

Penyao Environmental Protectio  vs.  RoadMain T Co

Penyao Environmental

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Penyao Environmental Protection are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Penyao Environmental sustained solid returns over the last few months and may actually be approaching a breakup point.

RoadMain T

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RoadMain T Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, RoadMain T sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penyao Environmental and RoadMain T

The main advantage of trading using opposite Penyao Environmental and RoadMain T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penyao Environmental position performs unexpectedly, RoadMain T 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 RoadMain T will offset losses from the drop in RoadMain T's long position.

The idea behind Penyao Environmental Protection and RoadMain T Co 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..