Correlation Between PCB Tec and Payton L

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

By analyzing existing cross correlation between PCB Tec and Payton L, you can compare the effects of market volatilities on PCB Tec and Payton L 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 Payton L. Check out your portfolio center. Please also check ongoing floating volatility patterns of PCB Tec and Payton L.

Diversification Opportunities for PCB Tec and Payton L

0.72

Correlation Coefficient

PCB Tec  Payton L

Poor diversification

The 3 months correlation between PCB and Payton is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding PCB Tec and Payton L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payton L 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 Payton L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payton L has no effect on the direction of PCB Tec i.e., PCB Tec and Payton L go up and down completely randomly.

Pair Corralation between PCB Tec and Payton L

Assuming the 90 days trading horizon PCB Tec is expected to generate 1.31 times more return on investment than Payton L. However, PCB Tec is 1.31 times more volatile than Payton L. It trades about 0.11 of its potential returns per unit of risk. Payton L is currently generating about 0.05 per unit of risk. If you would invest  20,289  in PCB Tec on September 17, 2024 and sell it today you would earn a total of  53,511  from holding PCB Tec or generate 263.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

PCB Tec  vs.  Payton L

PCB Tec

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PCB Tec are ranked lower than 15 (%) 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.

Payton L

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Payton L are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Payton L sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PCB Tec and Payton L

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

The idea behind PCB Tec and Payton L 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.