Correlation Between Piotech and NBTM New

Can any of the company-specific risk be diversified away by investing in both Piotech and NBTM New 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 NBTM New 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 NBTM New Materials, you can compare the effects of market volatilities on Piotech and NBTM New 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 NBTM New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Piotech and NBTM New.

Diversification Opportunities for Piotech and NBTM New

0.47

Correlation Coefficient

Piotech  NBTM New

Very weak diversification

The 3 months correlation between Piotech and NBTM is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Piotech Inc A and NBTM New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBTM New Materials 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 NBTM New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBTM New Materials has no effect on the direction of Piotech i.e., Piotech and NBTM New go up and down completely randomly.

Pair Corralation between Piotech and NBTM New

Assuming the 90 days trading horizon Piotech Inc A is expected to generate 1.55 times more return on investment than NBTM New. However, Piotech is 1.55 times more volatile than NBTM New Materials. It trades about 0.17 of its potential returns per unit of risk. NBTM New Materials is currently generating about 0.09 per unit of risk. If you would invest  10,580  in Piotech Inc A on September 25, 2024 and sell it today you would earn a total of  6,430  from holding Piotech Inc A or generate 60.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Piotech Inc A  vs.  NBTM New Materials

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.

NBTM New Materials

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NBTM New Materials are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NBTM New sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Piotech and NBTM New

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

The idea behind Piotech Inc A and NBTM New Materials 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.