Correlation Between Pao and Aesthetic Medical

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

By analyzing existing cross correlation between Pao Group and Aesthetic Medical Intl, you can compare the effects of market volatilities on Pao and Aesthetic 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 Pao with a short position of Aesthetic Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pao and Aesthetic Medical.

Diversification Opportunities for Pao and Aesthetic Medical

-0.31

Correlation Coefficient

Pao  Aesthetic Medical

Very good diversification

The 3 months correlation between Pao and Aesthetic is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Pao Group and Aesthetic Medical Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aesthetic Medical Intl and Pao 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 Pao Group are associated (or correlated) with Aesthetic Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aesthetic Medical Intl has no effect on the direction of Pao i.e., Pao and Aesthetic Medical go up and down completely randomly.

Pair Corralation between Pao and Aesthetic Medical

If you would invest  0.04  in Pao Group on September 13, 2024 and sell it today you would lose (0.01) from holding Pao Group or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Pao Group  vs.  Aesthetic Medical Intl

Pao Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pao Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Pao reported solid returns over the last few months and may actually be approaching a breakup point.

Aesthetic Medical Intl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aesthetic Medical Intl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Aesthetic Medical is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Pao and Aesthetic Medical

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

The idea behind Pao Group and Aesthetic Medical Intl 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.