Correlation Between Posiflex Technology and Pontex Polyblend
Can any of the company-specific risk be diversified away by investing in both Posiflex Technology and Pontex Polyblend 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 Pontex Polyblend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Posiflex Technology and Pontex Polyblend CoLtd, you can compare the effects of market volatilities on Posiflex Technology and Pontex Polyblend 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 Pontex Polyblend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Posiflex Technology and Pontex Polyblend.
Diversification Opportunities for Posiflex Technology and Pontex Polyblend
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Posiflex and Pontex is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Posiflex Technology and Pontex Polyblend CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pontex Polyblend CoLtd 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 Pontex Polyblend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pontex Polyblend CoLtd has no effect on the direction of Posiflex Technology i.e., Posiflex Technology and Pontex Polyblend go up and down completely randomly.
Pair Corralation between Posiflex Technology and Pontex Polyblend
Assuming the 90 days trading horizon Posiflex Technology is expected to generate 1.0 times more return on investment than Pontex Polyblend. However, Posiflex Technology is 1.0 times more volatile than Pontex Polyblend CoLtd. It trades about 0.22 of its potential returns per unit of risk. Pontex Polyblend CoLtd is currently generating about 0.13 per unit of risk. If you would invest 13,650 in Posiflex Technology on September 2, 2024 and sell it today you would earn a total of 17,400 from holding Posiflex Technology or generate 127.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Posiflex Technology vs. Pontex Polyblend CoLtd
Performance |
| Timeline |
| Posiflex Technology |
| Pontex Polyblend CoLtd |
Posiflex Technology and Pontex Polyblend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Posiflex Technology and Pontex Polyblend
The main advantage of trading using opposite Posiflex Technology and Pontex Polyblend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Posiflex Technology position performs unexpectedly, Pontex Polyblend 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 Pontex Polyblend will offset losses from the drop in Pontex Polyblend's long position.The idea behind Posiflex Technology and Pontex Polyblend CoLtd 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.| Pontex Polyblend vs. Cheng Shin Rubber | Pontex Polyblend vs. Nankang Rubber Tire | Pontex Polyblend vs. USI Corp | Pontex Polyblend vs. Asia Polymer Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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