Correlation Between Peijia Medical and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Peijia Medical and Discover Financial 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 Discover Financial 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 Discover Financial Services, you can compare the effects of market volatilities on Peijia Medical and Discover Financial 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 Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peijia Medical and Discover Financial.
Diversification Opportunities for Peijia Medical and Discover Financial
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Peijia and Discover is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Peijia Medical Limited and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial 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 Discover Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discover Financial has no effect on the direction of Peijia Medical i.e., Peijia Medical and Discover Financial go up and down completely randomly.
Pair Corralation between Peijia Medical and Discover Financial
Assuming the 90 days horizon Peijia Medical Limited is expected to under-perform the Discover Financial. In addition to that, Peijia Medical is 1.53 times more volatile than Discover Financial Services. It trades about -0.1 of its total potential returns per unit of risk. Discover Financial Services is currently generating about -0.04 per unit of volatility. If you would invest 16,642 in Discover Financial Services on October 17, 2024 and sell it today you would lose (194.00) from holding Discover Financial Services or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Peijia Medical Limited vs. Discover Financial Services
Performance |
| Timeline |
| Peijia Medical |
| Discover Financial |
Peijia Medical and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peijia Medical and Discover Financial
The main advantage of trading using opposite Peijia Medical and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peijia Medical position performs unexpectedly, Discover Financial 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 Discover Financial will offset losses from the drop in Discover Financial's long position.| Peijia Medical vs. Geely Automobile Holdings | Peijia Medical vs. FUYO GENERAL LEASE | Peijia Medical vs. Commercial Vehicle Group | Peijia Medical vs. COPLAND ROAD CAPITAL |
| Discover Financial vs. Peijia Medical Limited | Discover Financial vs. PICKN PAY STORES | Discover Financial vs. CHINA TONTINE WINES | Discover Financial vs. PEPTONIC MEDICAL |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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