Correlation Between Yifeng Pharmacy and PKU HealthCare

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Can any of the company-specific risk be diversified away by investing in both Yifeng Pharmacy and PKU HealthCare 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 Yifeng Pharmacy and PKU HealthCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yifeng Pharmacy and PKU HealthCare Corp, you can compare the effects of market volatilities on Yifeng Pharmacy and PKU HealthCare 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 Yifeng Pharmacy with a short position of PKU HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yifeng Pharmacy and PKU HealthCare.

Diversification Opportunities for Yifeng Pharmacy and PKU HealthCare

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Yifeng and PKU is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Yifeng Pharmacy and PKU HealthCare Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PKU HealthCare Corp and Yifeng Pharmacy 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 Yifeng Pharmacy are associated (or correlated) with PKU HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PKU HealthCare Corp has no effect on the direction of Yifeng Pharmacy i.e., Yifeng Pharmacy and PKU HealthCare go up and down completely randomly.

Pair Corralation between Yifeng Pharmacy and PKU HealthCare

Assuming the 90 days trading horizon Yifeng Pharmacy is expected to under-perform the PKU HealthCare. In addition to that, Yifeng Pharmacy is 1.15 times more volatile than PKU HealthCare Corp. It trades about -0.03 of its total potential returns per unit of risk. PKU HealthCare Corp is currently generating about 0.01 per unit of volatility. If you would invest  662.00  in PKU HealthCare Corp on September 12, 2024 and sell it today you would lose (2.00) from holding PKU HealthCare Corp or give up 0.3% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Yifeng Pharmacy  vs.  PKU HealthCare Corp

 Performance 
       Timeline  
Yifeng Pharmacy 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Yifeng Pharmacy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yifeng Pharmacy sustained solid returns over the last few months and may actually be approaching a breakup point.
PKU HealthCare Corp 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in PKU HealthCare Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PKU HealthCare sustained solid returns over the last few months and may actually be approaching a breakup point.

Yifeng Pharmacy and PKU HealthCare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Yifeng Pharmacy and PKU HealthCare

The main advantage of trading using opposite Yifeng Pharmacy and PKU HealthCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yifeng Pharmacy position performs unexpectedly, PKU HealthCare 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 PKU HealthCare will offset losses from the drop in PKU HealthCare's long position.
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The idea behind Yifeng Pharmacy and PKU HealthCare Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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