Correlation Between Parx Plastics and Intrasense

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

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

Diversification Opportunities for Parx Plastics and Intrasense

-0.53

Correlation Coefficient

Parx Plastics  Intrasense

Excellent diversification

The 3 months correlation between Parx and Intrasense is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Parx Plastics NV and Intrasense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrasense and Parx Plastics 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 Parx Plastics NV are associated (or correlated) with Intrasense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrasense has no effect on the direction of Parx Plastics i.e., Parx Plastics and Intrasense go up and down completely randomly.

Pair Corralation between Parx Plastics and Intrasense

Assuming the 90 days trading horizon Parx Plastics NV is expected to generate 1.34 times more return on investment than Intrasense. However, Parx Plastics is 1.34 times more volatile than Intrasense. It trades about 0.37 of its potential returns per unit of risk. Intrasense is currently generating about -0.11 per unit of risk. If you would invest  10.00  in Parx Plastics NV on September 25, 2024 and sell it today you would earn a total of  20.00  from holding Parx Plastics NV or generate 200.0% return on investment over 90 days.

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

Parx Plastics NV  vs.  Intrasense

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.

Intrasense

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intrasense 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.

Pair Trading with Parx Plastics and Intrasense

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

The idea behind Parx Plastics NV and Intrasense 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.