Correlation Between Payton Planar and Care Property

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

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

Diversification Opportunities for Payton Planar and Care Property

-0.53

Correlation Coefficient

Payton Planar  Care Property

Excellent diversification

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

Pair Corralation between Payton Planar and Care Property

Assuming the 90 days trading horizon Payton Planar Magnetics is expected to generate 1.87 times more return on investment than Care Property. However, Payton Planar is 1.87 times more volatile than Care Property Invest. It trades about -0.03 of its potential returns per unit of risk. Care Property Invest is currently generating about -0.18 per unit of risk. If you would invest  795.00  in Payton Planar Magnetics on September 3, 2024 and sell it today you would lose (45.00) from holding Payton Planar Magnetics or give up 5.66% of portfolio value over 90 days.

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

Payton Planar Magnetics  vs.  Care Property Invest

Payton Planar Magnetics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Payton Planar Magnetics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Payton Planar is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Care Property Invest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Care Property Invest has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Payton Planar and Care Property

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

The idea behind Payton Planar Magnetics and Care Property Invest 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.