Correlation Between Cirtek Holdings and Pacificonline Systems

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

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

Diversification Opportunities for Cirtek Holdings and Pacificonline Systems

-0.56

Correlation Coefficient

Cirtek Holdings  Pacificonline Systems

Excellent diversification

The 3 months correlation between Cirtek and Pacificonline is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cirtek Holdings Philippines and Pacificonline Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacificonline Systems and Cirtek 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 Cirtek Holdings Philippines are associated (or correlated) with Pacificonline Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacificonline Systems has no effect on the direction of Cirtek Holdings i.e., Cirtek Holdings and Pacificonline Systems go up and down completely randomly.

Pair Corralation between Cirtek Holdings and Pacificonline Systems

Assuming the 90 days trading horizon Cirtek Holdings Philippines is expected to generate 0.45 times more return on investment than Pacificonline Systems. However, Cirtek Holdings Philippines is 2.22 times less risky than Pacificonline Systems. It trades about 0.02 of its potential returns per unit of risk. Pacificonline Systems is currently generating about -0.18 per unit of risk. If you would invest  4,850  in Cirtek Holdings Philippines on September 12, 2024 and sell it today you would earn a total of  50.00  from holding Cirtek Holdings Philippines or generate 1.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.33%
Values	Daily Returns

Cirtek Holdings Philippines  vs.  Pacificonline Systems

Cirtek Holdings Phil

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cirtek Holdings Philippines are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, Cirtek Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pacificonline Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacificonline Systems 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 basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cirtek Holdings and Pacificonline Systems

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

The idea behind Cirtek Holdings Philippines and Pacificonline Systems 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.