Correlation Between Posiflex Technology and Newretail
Can any of the company-specific risk be diversified away by investing in both Posiflex Technology and Newretail 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 Posiflex Technology and Newretail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Posiflex Technology and Newretail Co, you can compare the effects of market volatilities on Posiflex Technology and Newretail 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 Posiflex Technology with a short position of Newretail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Posiflex Technology and Newretail.
Diversification Opportunities for Posiflex Technology and Newretail
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Posiflex and Newretail is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Posiflex Technology and Newretail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newretail and Posiflex 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 Posiflex Technology are associated (or correlated) with Newretail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newretail has no effect on the direction of Posiflex Technology i.e., Posiflex Technology and Newretail go up and down completely randomly.
Pair Corralation between Posiflex Technology and Newretail
Assuming the 90 days trading horizon Posiflex Technology is expected to generate 0.74 times more return on investment than Newretail. However, Posiflex Technology is 1.34 times less risky than Newretail. It trades about -0.18 of its potential returns per unit of risk. Newretail Co is currently generating about -0.17 per unit of risk. If you would invest 35,950 in Posiflex Technology on November 6, 2024 and sell it today you would lose (2,300) from holding Posiflex Technology or give up 6.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Posiflex Technology vs. Newretail Co
Performance |
| Timeline |
| Posiflex Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Newretail |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Posiflex Technology and Newretail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Posiflex Technology and Newretail
The main advantage of trading using opposite Posiflex Technology and Newretail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Posiflex Technology position performs unexpectedly, Newretail 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 Newretail will offset losses from the drop in Newretail's long position.The idea behind Posiflex Technology and Newretail Co 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.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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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