Correlation Between Public Power and Admie Holding

Can any of the company-specific risk be diversified away by investing in both Public Power and Admie Holding 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 Public Power and Admie Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Public Power and Admie Holding SA, you can compare the effects of market volatilities on Public Power and Admie Holding 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 Public Power with a short position of Admie Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Power and Admie Holding.

Diversification Opportunities for Public Power and Admie Holding

0.39

Correlation Coefficient

Public Power  Admie Holding

Weak diversification

The 3 months correlation between Public and Admie is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Public Power and Admie Holding SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Admie Holding SA and Public Power 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 Public Power are associated (or correlated) with Admie Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Admie Holding SA has no effect on the direction of Public Power i.e., Public Power and Admie Holding go up and down completely randomly.

Pair Corralation between Public Power and Admie Holding

Assuming the 90 days trading horizon Public Power is expected to generate 1.19 times less return on investment than Admie Holding. In addition to that, Public Power is 1.5 times more volatile than Admie Holding SA. It trades about 0.07 of its total potential returns per unit of risk. Admie Holding SA is currently generating about 0.12 per unit of volatility. If you would invest  226.00  in Admie Holding SA on September 14, 2024 and sell it today you would earn a total of  18.00  from holding Admie Holding SA or generate 7.96% return on investment over 90 days.

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

Public Power  vs.  Admie Holding SA

Public Power

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Public Power are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Public Power may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Admie Holding SA

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Admie Holding SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Admie Holding may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Public Power and Admie Holding

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

The idea behind Public Power and Admie Holding SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.