Correlation Between Peijia Medical and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both Peijia Medical and Iridium Communications 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 Peijia Medical and Iridium Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peijia Medical Limited and Iridium Communications, you can compare the effects of market volatilities on Peijia Medical and Iridium Communications 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 Peijia Medical with a short position of Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peijia Medical and Iridium Communications.
Diversification Opportunities for Peijia Medical and Iridium Communications
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Peijia and Iridium is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Peijia Medical Limited and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications and Peijia Medical 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 Peijia Medical Limited are associated (or correlated) with Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Peijia Medical i.e., Peijia Medical and Iridium Communications go up and down completely randomly.
Pair Corralation between Peijia Medical and Iridium Communications
Assuming the 90 days horizon Peijia Medical Limited is expected to under-perform the Iridium Communications. In addition to that, Peijia Medical is 1.32 times more volatile than Iridium Communications. It trades about -0.04 of its total potential returns per unit of risk. Iridium Communications is currently generating about 0.03 per unit of volatility. If you would invest 2,849 in Iridium Communications on October 13, 2024 and sell it today you would earn a total of 22.00 from holding Iridium Communications or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Peijia Medical Limited vs. Iridium Communications
Performance |
| Timeline |
| Peijia Medical |
| Iridium Communications |
Peijia Medical and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peijia Medical and Iridium Communications
The main advantage of trading using opposite Peijia Medical and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peijia Medical position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| Peijia Medical vs. Boston Scientific | Peijia Medical vs. Zimmer Biomet Holdings | Peijia Medical vs. Align Technology | Peijia Medical vs. Superior Plus Corp |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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