Correlation Between Posiflex Technology and Dimension Computer

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

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

Diversification Opportunities for Posiflex Technology and Dimension Computer

-0.21

Correlation Coefficient

Posiflex Technology  Dimension Computer

Very good diversification

The 3 months correlation between Posiflex and Dimension is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Posiflex Technology and Dimension Computer Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimension Computer and Posiflex 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 Posiflex Technology are associated (or correlated) with Dimension Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimension Computer has no effect on the direction of Posiflex Technology i.e., Posiflex Technology and Dimension Computer go up and down completely randomly.

Pair Corralation between Posiflex Technology and Dimension Computer

Assuming the 90 days trading horizon Posiflex Technology is expected to generate 0.65 times more return on investment than Dimension Computer. However, Posiflex Technology is 1.55 times less risky than Dimension Computer. It trades about 0.44 of its potential returns per unit of risk. Dimension Computer Technology is currently generating about 0.17 per unit of risk. If you would invest  28,200  in Posiflex Technology on September 22, 2024 and sell it today you would earn a total of  7,150  from holding Posiflex Technology or generate 25.35% return on investment over 90 days.

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

Posiflex Technology  vs.  Dimension Computer Technology

Posiflex Technology

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Posiflex Technology are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Posiflex Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Dimension Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimension Computer Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Dimension Computer 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 Posiflex Technology and Dimension Computer

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

The idea behind Posiflex Technology and Dimension Computer 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.