Correlation Between PKSHA TECHNOLOGY and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both PKSHA TECHNOLOGY and Rheinmetall 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 Rheinmetall 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 Rheinmetall AG, you can compare the effects of market volatilities on PKSHA TECHNOLOGY and Rheinmetall 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 Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of PKSHA TECHNOLOGY and Rheinmetall.
Diversification Opportunities for PKSHA TECHNOLOGY and Rheinmetall
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PKSHA and Rheinmetall is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding PKSHA TECHNOLOGY INC and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG 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 Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of PKSHA TECHNOLOGY i.e., PKSHA TECHNOLOGY and Rheinmetall go up and down completely randomly.
Pair Corralation between PKSHA TECHNOLOGY and Rheinmetall
Assuming the 90 days horizon PKSHA TECHNOLOGY INC is expected to under-perform the Rheinmetall. But the stock apears to be less risky and, when comparing its historical volatility, PKSHA TECHNOLOGY INC is 1.02 times less risky than Rheinmetall. The stock trades about -0.4 of its potential returns per unit of risk. The Rheinmetall AG is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 61,800 in Rheinmetall AG on October 14, 2024 and sell it today you would earn a total of 3,180 from holding Rheinmetall AG or generate 5.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PKSHA TECHNOLOGY INC vs. Rheinmetall AG
Performance |
| Timeline |
| PKSHA TECHNOLOGY INC |
| Rheinmetall AG |
PKSHA TECHNOLOGY and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PKSHA TECHNOLOGY and Rheinmetall
The main advantage of trading using opposite PKSHA TECHNOLOGY and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PKSHA TECHNOLOGY position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall'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 |
| Rheinmetall vs. PKSHA TECHNOLOGY INC | Rheinmetall vs. USU Software AG | Rheinmetall vs. Guidewire Software | Rheinmetall vs. SMA Solar Technology |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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