Correlation Between Pentair Plc and Yixin Group
Can any of the company-specific risk be diversified away by investing in both Pentair Plc and Yixin Group 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 Pentair Plc and Yixin Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair plc and Yixin Group Limited, you can compare the effects of market volatilities on Pentair Plc and Yixin Group 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 Pentair Plc with a short position of Yixin Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair Plc and Yixin Group.
Diversification Opportunities for Pentair Plc and Yixin Group
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pentair and Yixin is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and Yixin Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yixin Group Limited and Pentair Plc 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 Pentair plc are associated (or correlated) with Yixin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yixin Group Limited has no effect on the direction of Pentair Plc i.e., Pentair Plc and Yixin Group go up and down completely randomly.
Pair Corralation between Pentair Plc and Yixin Group
Assuming the 90 days horizon Pentair plc is expected to generate 0.39 times more return on investment than Yixin Group. However, Pentair plc is 2.54 times less risky than Yixin Group. It trades about 0.16 of its potential returns per unit of risk. Yixin Group Limited is currently generating about 0.03 per unit of risk. If you would invest 7,207 in Pentair plc on September 3, 2024 and sell it today you would earn a total of 3,108 from holding Pentair plc or generate 43.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pentair plc vs. Yixin Group Limited
Performance |
| Timeline |
| Pentair plc |
| Yixin Group Limited |
Pentair Plc and Yixin Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair Plc and Yixin Group
The main advantage of trading using opposite Pentair Plc and Yixin Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc position performs unexpectedly, Yixin Group 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 Yixin Group will offset losses from the drop in Yixin Group's long position.| Pentair Plc vs. Bumrungrad Hospital Public | Pentair Plc vs. METHODE ELECTRONICS | Pentair Plc vs. AOI Electronics Co | Pentair Plc vs. Brockhaus Capital Management |
| Yixin Group vs. Rayonier Advanced Materials | Yixin Group vs. InPlay Oil Corp | Yixin Group vs. USWE SPORTS AB | Yixin Group vs. ARISTOCRAT LEISURE |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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