Correlation Between Payton Planar and Telsys

Can any of the company-specific risk be diversified away by investing in both Payton Planar and Telsys 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 Telsys 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 Telsys, you can compare the effects of market volatilities on Payton Planar and Telsys 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 Telsys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payton Planar and Telsys.

Diversification Opportunities for Payton Planar and Telsys

0.18

Correlation Coefficient

Payton Planar  Telsys

Average diversification

The 3 months correlation between Payton and Telsys is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Payton Planar Magnetics and Telsys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telsys 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 Telsys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telsys has no effect on the direction of Payton Planar i.e., Payton Planar and Telsys go up and down completely randomly.

Pair Corralation between Payton Planar and Telsys

Assuming the 90 days trading horizon Payton Planar Magnetics is expected to under-perform the Telsys. But the stock apears to be less risky and, when comparing its historical volatility, Payton Planar Magnetics is 1.66 times less risky than Telsys. The stock trades about -0.03 of its potential returns per unit of risk. The Telsys is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,741,000  in Telsys on September 16, 2024 and sell it today you would earn a total of  167,000  from holding Telsys or generate 9.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	71.21%
Values	Daily Returns

Payton Planar Magnetics  vs.  Telsys

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.

Telsys

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Telsys are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Telsys sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Payton Planar and Telsys

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

The idea behind Payton Planar Magnetics and Telsys 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 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.