Correlation Between Brookfield Asset and Puhui Wealth

Can any of the company-specific risk be diversified away by investing in both Brookfield Asset and Puhui Wealth 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 Brookfield Asset and Puhui Wealth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brookfield Asset Management and Puhui Wealth Investment, you can compare the effects of market volatilities on Brookfield Asset and Puhui Wealth 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 Brookfield Asset with a short position of Puhui Wealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Asset and Puhui Wealth.

Diversification Opportunities for Brookfield Asset and Puhui Wealth

-0.63

Correlation Coefficient

Brookfield Asset  Puhui Wealth

Excellent diversification

The 3 months correlation between Brookfield and Puhui is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Puhui Wealth Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puhui Wealth Investment and Brookfield Asset 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 Brookfield Asset Management are associated (or correlated) with Puhui Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puhui Wealth Investment has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Puhui Wealth go up and down completely randomly.

Pair Corralation between Brookfield Asset and Puhui Wealth

Considering the 90-day investment horizon Brookfield Asset Management is expected to under-perform the Puhui Wealth. But the stock apears to be less risky and, when comparing its historical volatility, Brookfield Asset Management is 7.61 times less risky than Puhui Wealth. The stock trades about -0.01 of its potential returns per unit of risk. The Puhui Wealth Investment is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  441.00  in Puhui Wealth Investment on January 20, 2024 and sell it today you would lose (440.96) from holding Puhui Wealth Investment or give up 99.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	55.06%
Values	Daily Returns

Brookfield Asset Management  vs.  Puhui Wealth Investment

Brookfield Asset Man

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brookfield Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Brookfield Asset is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Puhui Wealth Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Puhui Wealth Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Puhui Wealth is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Brookfield Asset and Puhui Wealth

The main advantage of trading using opposite Brookfield Asset and Puhui Wealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Asset position performs unexpectedly, Puhui Wealth 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 Puhui Wealth will offset losses from the drop in Puhui Wealth's long position.

The idea behind Brookfield Asset Management and Puhui Wealth Investment 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .