Correlation Between PING and Venus

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

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

Diversification Opportunities for PING and Venus

0.0

Correlation Coefficient

PING  Venus

Pay attention - limited upside

The 3 months correlation between PING and Venus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PING and Venus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Venus and PING 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 PING are associated (or correlated) with Venus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Venus has no effect on the direction of PING i.e., PING and Venus go up and down completely randomly.

Pair Corralation between PING and Venus

Assuming the 90 days trading horizon PING is expected to generate 1.99 times more return on investment than Venus. However, PING is 1.99 times more volatile than Venus. It trades about 0.05 of its potential returns per unit of risk. Venus is currently generating about 0.05 per unit of risk. If you would invest  5.78  in PING on January 29, 2024 and sell it today you would earn a total of  10.22  from holding PING or generate 176.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	68.97%
Values	Daily Returns

PING  vs.  Venus

PING

Risk-Adjusted Performance

0 of 100

Very Weak

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

Venus

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PING and Venus

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

The idea behind PING and Venus 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.