Correlation Between Pfeiffer Vacuum and Malvern International

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

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

Diversification Opportunities for Pfeiffer Vacuum and Malvern International

0.13

Correlation Coefficient

Pfeiffer Vacuum  Malvern International

Average diversification

The 3 months correlation between Pfeiffer and Malvern is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Pfeiffer Vacuum Technology and Malvern International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malvern International and Pfeiffer Vacuum 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 Pfeiffer Vacuum Technology are associated (or correlated) with Malvern International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malvern International has no effect on the direction of Pfeiffer Vacuum i.e., Pfeiffer Vacuum and Malvern International go up and down completely randomly.

Pair Corralation between Pfeiffer Vacuum and Malvern International

Assuming the 90 days trading horizon Pfeiffer Vacuum Technology is expected to under-perform the Malvern International. But the stock apears to be less risky and, when comparing its historical volatility, Pfeiffer Vacuum Technology is 6.03 times less risky than Malvern International. The stock trades about -0.02 of its potential returns per unit of risk. The Malvern International is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  1,800  in Malvern International on September 13, 2024 and sell it today you would earn a total of  400.00  from holding Malvern International or generate 22.22% return on investment over 90 days.

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

Pfeiffer Vacuum Technology  vs.  Malvern International

Pfeiffer Vacuum Tech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pfeiffer Vacuum Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pfeiffer Vacuum is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Malvern International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Malvern International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Malvern International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfeiffer Vacuum and Malvern International

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

The idea behind Pfeiffer Vacuum Technology and Malvern International 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.