Correlation Between PSB Holdings and Otc Markets

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

By analyzing existing cross correlation between PSB Holdings and Otc Markets Group, you can compare the effects of market volatilities on PSB Holdings and Otc Markets 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 PSB Holdings with a short position of Otc Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of PSB Holdings and Otc Markets.

Diversification Opportunities for PSB Holdings and Otc Markets

0.76

Correlation Coefficient

PSB Holdings  Otc Markets

Poor diversification

The 3 months correlation between PSB and Otc is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding PSB Holdings and Otc Markets Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otc Markets Group and PSB Holdings 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 PSB Holdings are associated (or correlated) with Otc Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otc Markets Group has no effect on the direction of PSB Holdings i.e., PSB Holdings and Otc Markets go up and down completely randomly.

Pair Corralation between PSB Holdings and Otc Markets

Given the investment horizon of 90 days PSB Holdings is expected to under-perform the Otc Markets. But the otc stock apears to be less risky and, when comparing its historical volatility, PSB Holdings is 1.61 times less risky than Otc Markets. The otc stock trades about -0.32 of its potential returns per unit of risk. The Otc Markets Group is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  5,350  in Otc Markets Group on September 22, 2024 and sell it today you would lose (90.00) from holding Otc Markets Group or give up 1.68% of portfolio value over 90 days.

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

PSB Holdings  vs.  Otc Markets Group

PSB Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PSB Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, PSB Holdings is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Otc Markets Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Otc Markets Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Otc Markets displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PSB Holdings and Otc Markets

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

The idea behind PSB Holdings and Otc Markets Group 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.