Correlation Between PKSHA TECHNOLOGY and OBSERVE MEDICAL
Can any of the company-specific risk be diversified away by investing in both PKSHA TECHNOLOGY and OBSERVE MEDICAL 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 PKSHA TECHNOLOGY and OBSERVE MEDICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PKSHA TECHNOLOGY INC and OBSERVE MEDICAL ASA, you can compare the effects of market volatilities on PKSHA TECHNOLOGY and OBSERVE MEDICAL 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 PKSHA TECHNOLOGY with a short position of OBSERVE MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of PKSHA TECHNOLOGY and OBSERVE MEDICAL.
Diversification Opportunities for PKSHA TECHNOLOGY and OBSERVE MEDICAL
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PKSHA and OBSERVE is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding PKSHA TECHNOLOGY INC and OBSERVE MEDICAL ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OBSERVE MEDICAL ASA and PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY INC are associated (or correlated) with OBSERVE MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OBSERVE MEDICAL ASA has no effect on the direction of PKSHA TECHNOLOGY i.e., PKSHA TECHNOLOGY and OBSERVE MEDICAL go up and down completely randomly.
Pair Corralation between PKSHA TECHNOLOGY and OBSERVE MEDICAL
Assuming the 90 days horizon PKSHA TECHNOLOGY INC is expected to generate 0.53 times more return on investment than OBSERVE MEDICAL. However, PKSHA TECHNOLOGY INC is 1.9 times less risky than OBSERVE MEDICAL. It trades about -0.34 of its potential returns per unit of risk. OBSERVE MEDICAL ASA is currently generating about -0.22 per unit of risk. If you would invest 2,420 in PKSHA TECHNOLOGY INC on October 15, 2024 and sell it today you would lose (240.00) from holding PKSHA TECHNOLOGY INC or give up 9.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PKSHA TECHNOLOGY INC vs. OBSERVE MEDICAL ASA
Performance |
| Timeline |
| PKSHA TECHNOLOGY INC |
| OBSERVE MEDICAL ASA |
PKSHA TECHNOLOGY and OBSERVE MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PKSHA TECHNOLOGY and OBSERVE MEDICAL
The main advantage of trading using opposite PKSHA TECHNOLOGY and OBSERVE MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PKSHA TECHNOLOGY position performs unexpectedly, OBSERVE MEDICAL 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 OBSERVE MEDICAL will offset losses from the drop in OBSERVE MEDICAL's long position.| PKSHA TECHNOLOGY vs. Merit Medical Systems | PKSHA TECHNOLOGY vs. Cairo Communication SpA | PKSHA TECHNOLOGY vs. China Communications Services | PKSHA TECHNOLOGY vs. SK TELECOM TDADR |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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