Correlation Between PKSHA TECHNOLOGY and TreeHouse Foods
Can any of the company-specific risk be diversified away by investing in both PKSHA TECHNOLOGY and TreeHouse Foods 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 TreeHouse Foods 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 TreeHouse Foods, you can compare the effects of market volatilities on PKSHA TECHNOLOGY and TreeHouse Foods 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 TreeHouse Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of PKSHA TECHNOLOGY and TreeHouse Foods.
Diversification Opportunities for PKSHA TECHNOLOGY and TreeHouse Foods
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PKSHA and TreeHouse is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding PKSHA TECHNOLOGY INC and TreeHouse Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TreeHouse Foods 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 TreeHouse Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TreeHouse Foods has no effect on the direction of PKSHA TECHNOLOGY i.e., PKSHA TECHNOLOGY and TreeHouse Foods go up and down completely randomly.
Pair Corralation between PKSHA TECHNOLOGY and TreeHouse Foods
Assuming the 90 days horizon PKSHA TECHNOLOGY INC is expected to generate 1.82 times more return on investment than TreeHouse Foods. However, PKSHA TECHNOLOGY is 1.82 times more volatile than TreeHouse Foods. It trades about 0.04 of its potential returns per unit of risk. TreeHouse Foods is currently generating about -0.03 per unit of risk. If you would invest 1,780 in PKSHA TECHNOLOGY INC on September 1, 2024 and sell it today you would earn a total of 660.00 from holding PKSHA TECHNOLOGY INC or generate 37.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PKSHA TECHNOLOGY INC vs. TreeHouse Foods
Performance |
| Timeline |
| PKSHA TECHNOLOGY INC |
| TreeHouse Foods |
PKSHA TECHNOLOGY and TreeHouse Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PKSHA TECHNOLOGY and TreeHouse Foods
The main advantage of trading using opposite PKSHA TECHNOLOGY and TreeHouse Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PKSHA TECHNOLOGY position performs unexpectedly, TreeHouse Foods 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 TreeHouse Foods will offset losses from the drop in TreeHouse Foods' long position.| PKSHA TECHNOLOGY vs. Liberty Broadband | PKSHA TECHNOLOGY vs. COMPUTERSHARE | PKSHA TECHNOLOGY vs. Internet Thailand PCL | PKSHA TECHNOLOGY vs. Cars Inc |
| TreeHouse Foods vs. LEGACY IRON ORE | TreeHouse Foods vs. Reliance Steel Aluminum | TreeHouse Foods vs. Caltagirone SpA | TreeHouse Foods vs. REGAL ASIAN INVESTMENTS |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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