Correlation Between Peijia Medical and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both Peijia Medical and Methode Electronics 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 Methode Electronics 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 Methode Electronics, you can compare the effects of market volatilities on Peijia Medical and Methode Electronics 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 Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peijia Medical and Methode Electronics.
Diversification Opportunities for Peijia Medical and Methode Electronics
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Peijia and Methode is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Peijia Medical Limited and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics 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 Methode Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methode Electronics has no effect on the direction of Peijia Medical i.e., Peijia Medical and Methode Electronics go up and down completely randomly.
Pair Corralation between Peijia Medical and Methode Electronics
Assuming the 90 days horizon Peijia Medical Limited is expected to generate 0.67 times more return on investment than Methode Electronics. However, Peijia Medical Limited is 1.48 times less risky than Methode Electronics. It trades about 0.06 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.04 per unit of risk. If you would invest 46.00 in Peijia Medical Limited on October 11, 2024 and sell it today you would earn a total of 1.00 from holding Peijia Medical Limited or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Peijia Medical Limited vs. Methode Electronics
Performance |
| Timeline |
| Peijia Medical |
| Methode Electronics |
Peijia Medical and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peijia Medical and Methode Electronics
The main advantage of trading using opposite Peijia Medical and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peijia Medical position performs unexpectedly, Methode Electronics 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 Methode Electronics will offset losses from the drop in Methode Electronics' long position.| Peijia Medical vs. Hitachi Construction Machinery | Peijia Medical vs. AGRICULTBK HADR25 YC | Peijia Medical vs. ecotel communication ag | Peijia Medical vs. North American Construction |
| Methode Electronics vs. Peijia Medical Limited | Methode Electronics vs. SPECTRAL MEDICAL | Methode Electronics vs. Sumitomo Rubber Industries | Methode Electronics vs. Diamyd Medical AB |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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