Correlation Between Disney and Puyi

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

By analyzing existing cross correlation between Walt Disney and Puyi Inc ADR, you can compare the effects of market volatilities on Disney and Puyi 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 Disney with a short position of Puyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Puyi.

Diversification Opportunities for Disney and Puyi

0.61

Correlation Coefficient

Disney  Puyi

Poor diversification

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

Pair Corralation between Disney and Puyi

If you would invest  8,913  in Walt Disney on September 3, 2024 and sell it today you would earn a total of  2,834  from holding Walt Disney or generate 31.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Walt Disney  vs.  Puyi Inc ADR

Walt Disney

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Puyi Inc ADR

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Disney and Puyi

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

The idea behind Walt Disney and Puyi Inc ADR 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.