Correlation Between PCB Tec and MediPress Health

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

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

Diversification Opportunities for PCB Tec and MediPress Health

0.11

Correlation Coefficient

PCB Tec  MediPress Health

Average diversification

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

Pair Corralation between PCB Tec and MediPress Health

Assuming the 90 days trading horizon PCB Tec is expected to generate 1.79 times more return on investment than MediPress Health. However, PCB Tec is 1.79 times more volatile than MediPress Health Limited Partnership. It trades about 0.19 of its potential returns per unit of risk. MediPress Health Limited Partnership is currently generating about 0.12 per unit of risk. If you would invest  58,020  in PCB Tec on September 29, 2024 and sell it today you would earn a total of  19,010  from holding PCB Tec or generate 32.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.87%
Values	Daily Returns

PCB Tec  vs.  MediPress Health Limited Partn

PCB Tec

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PCB Tec are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PCB Tec sustained solid returns over the last few months and may actually be approaching a breakup point.

MediPress Health Lim

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MediPress Health Limited Partnership are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MediPress Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PCB Tec and MediPress Health

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

The idea behind PCB Tec and MediPress Health Limited Partnership 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.

Check out your portfolio center.

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.