Correlation Between BOSTON BEER and Peijia Medical
Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and Peijia Medical 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 BOSTON BEER and Peijia Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BOSTON BEER A and Peijia Medical Limited, you can compare the effects of market volatilities on BOSTON BEER and Peijia Medical 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 BOSTON BEER with a short position of Peijia Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and Peijia Medical.
Diversification Opportunities for BOSTON BEER and Peijia Medical
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BOSTON and Peijia is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and Peijia Medical Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peijia Medical and BOSTON BEER 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 BOSTON BEER A are associated (or correlated) with Peijia Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peijia Medical has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and Peijia Medical go up and down completely randomly.
Pair Corralation between BOSTON BEER and Peijia Medical
Assuming the 90 days trading horizon BOSTON BEER A is expected to under-perform the Peijia Medical. But the stock apears to be less risky and, when comparing its historical volatility, BOSTON BEER A is 1.29 times less risky than Peijia Medical. The stock trades about -0.39 of its potential returns per unit of risk. The Peijia Medical Limited is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 46.00 in Peijia Medical Limited on November 7, 2024 and sell it today you would lose (4.00) from holding Peijia Medical Limited or give up 8.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
BOSTON BEER A vs. Peijia Medical Limited
Performance |
| Timeline |
| BOSTON BEER A |
| Peijia Medical |
BOSTON BEER and Peijia Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOSTON BEER and Peijia Medical
The main advantage of trading using opposite BOSTON BEER and Peijia Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, Peijia Medical 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 Peijia Medical will offset losses from the drop in Peijia Medical's long position.| BOSTON BEER vs. Apple Inc | BOSTON BEER vs. Apple Inc | BOSTON BEER vs. Apple Inc | BOSTON BEER vs. Apple Inc |
| Peijia Medical vs. MINCO SILVER | Peijia Medical vs. Sekisui Chemical Co | Peijia Medical vs. Mitsui Chemicals | Peijia Medical vs. MAG SILVER |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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