Correlation Between Pioneer Floating and China Health

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

By analyzing existing cross correlation between Pioneer Floating Rate and China Health Management, you can compare the effects of market volatilities on Pioneer Floating and China Health 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 Pioneer Floating with a short position of China Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pioneer Floating and China Health.

Diversification Opportunities for Pioneer Floating and China Health

-0.37

Correlation Coefficient

Pioneer Floating  China Health

Very good diversification

The 3 months correlation between Pioneer and China is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Floating Rate and China Health Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Health Management and Pioneer Floating 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 Pioneer Floating Rate are associated (or correlated) with China Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Health Management has no effect on the direction of Pioneer Floating i.e., Pioneer Floating and China Health go up and down completely randomly.

Pair Corralation between Pioneer Floating and China Health

Considering the 90-day investment horizon Pioneer Floating Rate is expected to generate 0.04 times more return on investment than China Health. However, Pioneer Floating Rate is 23.8 times less risky than China Health. It trades about 0.23 of its potential returns per unit of risk. China Health Management is currently generating about -0.14 per unit of risk. If you would invest  968.00  in Pioneer Floating Rate on September 15, 2024 and sell it today you would earn a total of  16.00  from holding Pioneer Floating Rate or generate 1.65% return on investment over 90 days.

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

Pioneer Floating Rate  vs.  China Health Management

Pioneer Floating Rate

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Floating Rate are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Pioneer Floating is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

China Health Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Health Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Pioneer Floating and China Health

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

The idea behind Pioneer Floating Rate and China Health Management 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.