Correlation Between PPC and Fletcher Building

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

By analyzing existing cross correlation between PPC Ltd ADR and Fletcher Building Ltd, you can compare the effects of market volatilities on PPC and Fletcher Building 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 PPC with a short position of Fletcher Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPC and Fletcher Building.

Diversification Opportunities for PPC and Fletcher Building

0.17

Correlation Coefficient

PPC  Fletcher Building

Average diversification

The 3 months correlation between PPC and Fletcher is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding PPC Ltd ADR and Fletcher Building Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fletcher Building and PPC 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 PPC Ltd ADR are associated (or correlated) with Fletcher Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fletcher Building has no effect on the direction of PPC i.e., PPC and Fletcher Building go up and down completely randomly.

Pair Corralation between PPC and Fletcher Building

If you would invest  33.00  in PPC Ltd ADR on September 14, 2024 and sell it today you would earn a total of  0.00  from holding PPC Ltd ADR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

PPC Ltd ADR  vs.  Fletcher Building Ltd

PPC Ltd ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PPC Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, PPC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fletcher Building

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fletcher Building Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain fairly 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.

Pair Trading with PPC and Fletcher Building

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

The idea behind PPC Ltd ADR and Fletcher Building Ltd 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.