Correlation Between Penpower Technology and Insyde Software

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

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

Diversification Opportunities for Penpower Technology and Insyde Software

-0.16

Correlation Coefficient

Penpower Technology  Insyde Software

Good diversification

The 3 months correlation between Penpower and Insyde is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Penpower Technology and Insyde Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insyde Software and Penpower Technology 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 Penpower Technology are associated (or correlated) with Insyde Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insyde Software has no effect on the direction of Penpower Technology i.e., Penpower Technology and Insyde Software go up and down completely randomly.

Pair Corralation between Penpower Technology and Insyde Software

Assuming the 90 days trading horizon Penpower Technology is expected to generate 0.78 times more return on investment than Insyde Software. However, Penpower Technology is 1.28 times less risky than Insyde Software. It trades about -0.01 of its potential returns per unit of risk. Insyde Software is currently generating about -0.13 per unit of risk. If you would invest  2,650  in Penpower Technology on September 24, 2024 and sell it today you would lose (55.00) from holding Penpower Technology or give up 2.08% of portfolio value over 90 days.

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

Penpower Technology  vs.  Insyde Software

Penpower Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Penpower Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Penpower Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Insyde Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insyde Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Penpower Technology and Insyde Software

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

The idea behind Penpower Technology and Insyde Software 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.