Correlation Between Autosports and PM Capital

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

By analyzing existing cross correlation between Autosports Group and PM Capital Global, you can compare the effects of market volatilities on Autosports and PM Capital 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 Autosports with a short position of PM Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autosports and PM Capital.

Diversification Opportunities for Autosports and PM Capital

0.54

Correlation Coefficient

Autosports  PM Capital

Very weak diversification

The 3 months correlation between Autosports and PGF is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Autosports Group and PM Capital Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PM Capital Global and Autosports 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 Autosports Group are associated (or correlated) with PM Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PM Capital Global has no effect on the direction of Autosports i.e., Autosports and PM Capital go up and down completely randomly.

Pair Corralation between Autosports and PM Capital

Assuming the 90 days trading horizon Autosports Group is expected to under-perform the PM Capital. In addition to that, Autosports is 1.86 times more volatile than PM Capital Global. It trades about -0.09 of its total potential returns per unit of risk. PM Capital Global is currently generating about 0.11 per unit of volatility. If you would invest  216.00  in PM Capital Global on September 4, 2024 and sell it today you would earn a total of  14.00  from holding PM Capital Global or generate 6.48% return on investment over 90 days.

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

Autosports Group  vs.  PM Capital Global

Autosports Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autosports Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

PM Capital Global

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PM Capital Global are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, PM Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Autosports and PM Capital

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

The idea behind Autosports Group and PM Capital Global 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.