Correlation Between POLENERGIA and PKSHA TECHNOLOGY

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

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

Diversification Opportunities for POLENERGIA and PKSHA TECHNOLOGY

-0.23

Correlation Coefficient

POLENERGIA  PKSHA TECHNOLOGY

Very good diversification

The 3 months correlation between POLENERGIA and PKSHA is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding POLENERGIA SA ZY and PKSHA TECHNOLOGY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PKSHA TECHNOLOGY INC and POLENERGIA 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 POLENERGIA SA ZY are associated (or correlated) with PKSHA TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PKSHA TECHNOLOGY INC has no effect on the direction of POLENERGIA i.e., POLENERGIA and PKSHA TECHNOLOGY go up and down completely randomly.

Pair Corralation between POLENERGIA and PKSHA TECHNOLOGY

Assuming the 90 days horizon POLENERGIA SA ZY is expected to generate 0.4 times more return on investment than PKSHA TECHNOLOGY. However, POLENERGIA SA ZY is 2.49 times less risky than PKSHA TECHNOLOGY. It trades about 0.04 of its potential returns per unit of risk. PKSHA TECHNOLOGY INC is currently generating about -0.27 per unit of risk. If you would invest  1,590  in POLENERGIA SA ZY on September 30, 2024 and sell it today you would earn a total of  10.00  from holding POLENERGIA SA ZY or generate 0.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

POLENERGIA SA ZY  vs.  PKSHA TECHNOLOGY INC

POLENERGIA SA ZY

Risk-Adjusted Performance

0 of 100

Very Weak

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

PKSHA TECHNOLOGY INC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PKSHA TECHNOLOGY INC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PKSHA TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with POLENERGIA and PKSHA TECHNOLOGY

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

The idea behind POLENERGIA SA ZY and PKSHA TECHNOLOGY INC 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 .