Correlation Between Pentagon I and Evertz Technologies

Can any of the company-specific risk be diversified away by investing in both Pentagon I and Evertz Technologies 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 Pentagon I and Evertz Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pentagon I Capital and Evertz Technologies Limited, you can compare the effects of market volatilities on Pentagon I and Evertz Technologies 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 Pentagon I with a short position of Evertz Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentagon I and Evertz Technologies.

Diversification Opportunities for Pentagon I and Evertz Technologies

-0.5

Correlation Coefficient

Pentagon I  Evertz Technologies

Very good diversification

The 3 months correlation between Pentagon and Evertz is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Pentagon I Capital and Evertz Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertz Technologies and Pentagon I 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 Pentagon I Capital are associated (or correlated) with Evertz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertz Technologies has no effect on the direction of Pentagon I i.e., Pentagon I and Evertz Technologies go up and down completely randomly.

Pair Corralation between Pentagon I and Evertz Technologies

Assuming the 90 days trading horizon Pentagon I Capital is expected to under-perform the Evertz Technologies. In addition to that, Pentagon I is 11.33 times more volatile than Evertz Technologies Limited. It trades about -0.17 of its total potential returns per unit of risk. Evertz Technologies Limited is currently generating about 0.03 per unit of volatility. If you would invest  1,224  in Evertz Technologies Limited on September 23, 2024 and sell it today you would earn a total of  7.00  from holding Evertz Technologies Limited or generate 0.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Pentagon I Capital  vs.  Evertz Technologies Limited

Pentagon I Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pentagon I Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators 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.

Evertz Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evertz Technologies Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Evertz Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pentagon I and Evertz Technologies

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

The idea behind Pentagon I Capital and Evertz Technologies Limited 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.