Correlation Between PMC LABEL and BA Airport

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

By analyzing existing cross correlation between PMC LABEL MATERIALS and BA Airport Leasehold, you can compare the effects of market volatilities on PMC LABEL and BA Airport 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 PMC LABEL with a short position of BA Airport. Check out your portfolio center. Please also check ongoing floating volatility patterns of PMC LABEL and BA Airport.

Diversification Opportunities for PMC LABEL and BA Airport

0.7

Correlation Coefficient

PMC LABEL  BA Airport

Poor diversification

The 3 months correlation between PMC and BAREIT is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding PMC LABEL MATERIALS and BA Airport Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BA Airport Leasehold and PMC LABEL 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 PMC LABEL MATERIALS are associated (or correlated) with BA Airport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BA Airport Leasehold has no effect on the direction of PMC LABEL i.e., PMC LABEL and BA Airport go up and down completely randomly.

Pair Corralation between PMC LABEL and BA Airport

Assuming the 90 days trading horizon PMC LABEL MATERIALS is expected to under-perform the BA Airport. In addition to that, PMC LABEL is 4.43 times more volatile than BA Airport Leasehold. It trades about -0.2 of its total potential returns per unit of risk. BA Airport Leasehold is currently generating about -0.04 per unit of volatility. If you would invest  966.00  in BA Airport Leasehold on September 15, 2024 and sell it today you would lose (21.00) from holding BA Airport Leasehold or give up 2.17% of portfolio value over 90 days.

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

PMC LABEL MATERIALS  vs.  BA Airport Leasehold

PMC LABEL MATERIALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PMC LABEL MATERIALS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

BA Airport Leasehold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BA Airport Leasehold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BA Airport is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PMC LABEL and BA Airport

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

The idea behind PMC LABEL MATERIALS and BA Airport Leasehold 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.