Correlation Between Italian Thai and PCS Machine

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

By analyzing existing cross correlation between Italian Thai Development Public and PCS Machine Group, you can compare the effects of market volatilities on Italian Thai and PCS Machine 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 Italian Thai with a short position of PCS Machine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Italian Thai and PCS Machine.

Diversification Opportunities for Italian Thai and PCS Machine

0.6

Correlation Coefficient

Italian Thai  PCS Machine

Poor diversification

The 3 months correlation between Italian and PCS is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Italian Thai Development Publi and PCS Machine Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCS Machine Group and Italian Thai 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 Italian Thai Development Public are associated (or correlated) with PCS Machine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCS Machine Group has no effect on the direction of Italian Thai i.e., Italian Thai and PCS Machine go up and down completely randomly.

Pair Corralation between Italian Thai and PCS Machine

Assuming the 90 days trading horizon Italian Thai is expected to generate 1.02 times less return on investment than PCS Machine. In addition to that, Italian Thai is 1.0 times more volatile than PCS Machine Group. It trades about 0.06 of its total potential returns per unit of risk. PCS Machine Group is currently generating about 0.06 per unit of volatility. If you would invest  502.00  in PCS Machine Group on September 14, 2024 and sell it today you would lose (72.00) from holding PCS Machine Group or give up 14.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.59%
Values	Daily Returns

Italian Thai Development Publi  vs.  PCS Machine Group

Italian Thai Develop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Italian Thai Development Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PCS Machine Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PCS Machine Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, PCS Machine is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Italian Thai and PCS Machine

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

The idea behind Italian Thai Development Public and PCS Machine Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.