Correlation Between Piotech and Marssenger Kitchenware

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

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

Diversification Opportunities for Piotech and Marssenger Kitchenware

0.76

Correlation Coefficient

Piotech  Marssenger Kitchenware

Poor diversification

The 3 months correlation between Piotech and Marssenger is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Piotech Inc A and Marssenger Kitchenware Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marssenger Kitchenware and Piotech 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 Piotech Inc A are associated (or correlated) with Marssenger Kitchenware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marssenger Kitchenware has no effect on the direction of Piotech i.e., Piotech and Marssenger Kitchenware go up and down completely randomly.

Pair Corralation between Piotech and Marssenger Kitchenware

Assuming the 90 days trading horizon Piotech Inc A is expected to generate 1.35 times more return on investment than Marssenger Kitchenware. However, Piotech is 1.35 times more volatile than Marssenger Kitchenware Co. It trades about 0.15 of its potential returns per unit of risk. Marssenger Kitchenware Co is currently generating about 0.16 per unit of risk. If you would invest  16,790  in Piotech Inc A on September 4, 2024 and sell it today you would earn a total of  2,201  from holding Piotech Inc A or generate 13.11% return on investment over 90 days.

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

Piotech Inc A  vs.  Marssenger Kitchenware Co

Piotech Inc A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Piotech Inc A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Piotech sustained solid returns over the last few months and may actually be approaching a breakup point.

Marssenger Kitchenware

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marssenger Kitchenware Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Marssenger Kitchenware sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Piotech and Marssenger Kitchenware

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

The idea behind Piotech Inc A and Marssenger Kitchenware Co 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 Transaction History module to view history of all your transactions and understand their impact on performance.