Correlation Between C20 and PPC

Can any of the company-specific risk be diversified away by investing in both C20 and PPC 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 C20 and PPC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between C20 and PPC, you can compare the effects of market volatilities on C20 and PPC 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 C20 with a short position of PPC. Check out your portfolio center. Please also check ongoing floating volatility patterns of C20 and PPC.

Diversification Opportunities for C20 and PPC

0.11

Correlation Coefficient

C20  PPC

Average diversification

The 3 months correlation between C20 and PPC is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding C20 and PPC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPC and C20 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 C20 are associated (or correlated) with PPC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPC has no effect on the direction of C20 i.e., C20 and PPC go up and down completely randomly.

Pair Corralation between C20 and PPC

If you would invest  35.00  in PPC on September 2, 2024 and sell it today you would earn a total of  5.00  from holding PPC or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.52%
Values	Daily Returns

C20  vs.  PPC

C20

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days C20 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, C20 is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

PPC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PPC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, PPC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with C20 and PPC

The main advantage of trading using opposite C20 and PPC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C20 position performs unexpectedly, PPC 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 PPC will offset losses from the drop in PPC's long position.

The idea behind C20 and PPC 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.