Correlation Between PH Tech and Raontech

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Can any of the company-specific risk be diversified away by investing in both PH Tech and Raontech 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 PH Tech and Raontech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PH Tech Co and Raontech, you can compare the effects of market volatilities on PH Tech and Raontech 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 PH Tech with a short position of Raontech. Check out your portfolio center. Please also check ongoing floating volatility patterns of PH Tech and Raontech.

Diversification Opportunities for PH Tech and Raontech

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between 239890 and Raontech is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding PH Tech Co and Raontech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raontech and PH Tech 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 PH Tech Co are associated (or correlated) with Raontech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raontech has no effect on the direction of PH Tech i.e., PH Tech and Raontech go up and down completely randomly.

Pair Corralation between PH Tech and Raontech

Assuming the 90 days trading horizon PH Tech Co is expected to generate 1.99 times more return on investment than Raontech. However, PH Tech is 1.99 times more volatile than Raontech. It trades about 0.02 of its potential returns per unit of risk. Raontech is currently generating about -0.19 per unit of risk. If you would invest  763,000  in PH Tech Co on September 3, 2024 and sell it today you would earn a total of  2,000  from holding PH Tech Co or generate 0.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

PH Tech Co  vs.  Raontech

 Performance 
       Timeline  
PH Tech 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days PH Tech Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.
Raontech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Raontech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

PH Tech and Raontech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PH Tech and Raontech

The main advantage of trading using opposite PH Tech and Raontech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PH Tech position performs unexpectedly, Raontech 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 Raontech will offset losses from the drop in Raontech's long position.
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The idea behind PH Tech Co and Raontech 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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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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