Correlation Between Sensorion and Parx Plastics

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

By analyzing existing cross correlation between Sensorion SA and Parx Plastics NV, you can compare the effects of market volatilities on Sensorion and Parx Plastics 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 Sensorion with a short position of Parx Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensorion and Parx Plastics.

Diversification Opportunities for Sensorion and Parx Plastics

-0.67

Correlation Coefficient

Sensorion  Parx Plastics

Excellent diversification

The 3 months correlation between Sensorion and Parx is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sensorion SA and Parx Plastics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parx Plastics NV and Sensorion 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 Sensorion SA are associated (or correlated) with Parx Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parx Plastics NV has no effect on the direction of Sensorion i.e., Sensorion and Parx Plastics go up and down completely randomly.

Pair Corralation between Sensorion and Parx Plastics

Assuming the 90 days trading horizon Sensorion SA is expected to generate 1.96 times more return on investment than Parx Plastics. However, Sensorion is 1.96 times more volatile than Parx Plastics NV. It trades about 0.01 of its potential returns per unit of risk. Parx Plastics NV is currently generating about -0.21 per unit of risk. If you would invest  62.00  in Sensorion SA on September 25, 2024 and sell it today you would earn a total of  0.00  from holding Sensorion SA or generate 0.0% return on investment over 90 days.

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

Sensorion SA  vs.  Parx Plastics NV

Sensorion SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sensorion SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Parx Plastics NV

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Parx Plastics NV are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Parx Plastics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sensorion and Parx Plastics

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

The idea behind Sensorion SA and Parx Plastics NV 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.