Correlation Between Insyde Software and Penpower Technology

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

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

Diversification Opportunities for Insyde Software and Penpower Technology

-0.16

Correlation Coefficient

Insyde Software  Penpower Technology

Good diversification

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

Pair Corralation between Insyde Software and Penpower Technology

Assuming the 90 days trading horizon Insyde Software is expected to under-perform the Penpower Technology. In addition to that, Insyde Software is 1.28 times more volatile than Penpower Technology. It trades about -0.13 of its total potential returns per unit of risk. Penpower Technology is currently generating about -0.01 per unit of volatility. 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

Insyde Software  vs.  Penpower Technology

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.

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.

Pair Trading with Insyde Software and Penpower Technology

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

The idea behind Insyde Software and Penpower Technology 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.