Correlation Between Pingtan Marine and Alfa Laval

Can any of the company-specific risk be diversified away by investing in both Pingtan Marine and Alfa Laval 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 Pingtan Marine and Alfa Laval into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pingtan Marine Enterprise and Alfa Laval AB, you can compare the effects of market volatilities on Pingtan Marine and Alfa Laval 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 Pingtan Marine with a short position of Alfa Laval. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pingtan Marine and Alfa Laval.

Diversification Opportunities for Pingtan Marine and Alfa Laval

-0.53

Correlation Coefficient

Pingtan Marine  Alfa Laval

Excellent diversification

The 3 months correlation between Pingtan and Alfa is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Pingtan Marine Enterprise and Alfa Laval AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Laval AB and Pingtan Marine 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 Pingtan Marine Enterprise are associated (or correlated) with Alfa Laval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Laval AB has no effect on the direction of Pingtan Marine i.e., Pingtan Marine and Alfa Laval go up and down completely randomly.

Pair Corralation between Pingtan Marine and Alfa Laval

If you would invest  27.00  in Pingtan Marine Enterprise on January 25, 2024 and sell it today you would earn a total of  0.00  from holding Pingtan Marine Enterprise or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Pingtan Marine Enterprise  vs.  Alfa Laval AB

Pingtan Marine Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pingtan Marine Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Pingtan Marine is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Alfa Laval AB

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Laval AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Alfa Laval may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Pingtan Marine and Alfa Laval

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

The idea behind Pingtan Marine Enterprise and Alfa Laval AB 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.