Correlation Between PESTECH International and Protasco Bhd
Can any of the company-specific risk be diversified away by investing in both PESTECH International and Protasco Bhd 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 PESTECH International and Protasco Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PESTECH International Bhd and Protasco Bhd, you can compare the effects of market volatilities on PESTECH International and Protasco Bhd 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 PESTECH International with a short position of Protasco Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of PESTECH International and Protasco Bhd.
Diversification Opportunities for PESTECH International and Protasco Bhd
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PESTECH and Protasco is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding PESTECH International Bhd and Protasco Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Protasco Bhd and PESTECH International 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 PESTECH International Bhd are associated (or correlated) with Protasco Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Protasco Bhd has no effect on the direction of PESTECH International i.e., PESTECH International and Protasco Bhd go up and down completely randomly.
Pair Corralation between PESTECH International and Protasco Bhd
Assuming the 90 days trading horizon PESTECH International Bhd is expected to generate 1.58 times more return on investment than Protasco Bhd. However, PESTECH International is 1.58 times more volatile than Protasco Bhd. It trades about 0.02 of its potential returns per unit of risk. Protasco Bhd is currently generating about 0.01 per unit of risk. If you would invest 19.00 in PESTECH International Bhd on October 20, 2024 and sell it today you would earn a total of 0.00 from holding PESTECH International Bhd or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PESTECH International Bhd vs. Protasco Bhd
Performance |
| Timeline |
| PESTECH International Bhd |
| Protasco Bhd |
PESTECH International and Protasco Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PESTECH International and Protasco Bhd
The main advantage of trading using opposite PESTECH International and Protasco Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PESTECH International position performs unexpectedly, Protasco Bhd 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 Protasco Bhd will offset losses from the drop in Protasco Bhd's long position.| PESTECH International vs. Kobay Tech Bhd | PESTECH International vs. CPE Technology Berhad | PESTECH International vs. K One Technology Bhd | PESTECH International vs. Greatech Technology Bhd |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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