Correlation Between Actron Technology and Global PMX
Can any of the company-specific risk be diversified away by investing in both Actron Technology and Global PMX 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 Actron Technology and Global PMX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Actron Technology and Global PMX Co, you can compare the effects of market volatilities on Actron Technology and Global PMX 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 Actron Technology with a short position of Global PMX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Actron Technology and Global PMX.
Diversification Opportunities for Actron Technology and Global PMX
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Actron and Global is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Actron Technology and Global PMX Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global PMX and Actron 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 Actron Technology are associated (or correlated) with Global PMX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global PMX has no effect on the direction of Actron Technology i.e., Actron Technology and Global PMX go up and down completely randomly.
Pair Corralation between Actron Technology and Global PMX
Assuming the 90 days trading horizon Actron Technology is expected to generate 5.28 times less return on investment than Global PMX. But when comparing it to its historical volatility, Actron Technology is 1.25 times less risky than Global PMX. It trades about 0.0 of its potential returns per unit of risk. Global PMX Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 11,000 in Global PMX Co on November 3, 2024 and sell it today you would lose (650.00) from holding Global PMX Co or give up 5.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Actron Technology vs. Global PMX Co
Performance |
| Timeline |
| Actron Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Global PMX |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Actron Technology and Global PMX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Actron Technology and Global PMX
The main advantage of trading using opposite Actron Technology and Global PMX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Actron Technology position performs unexpectedly, Global PMX 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 Global PMX will offset losses from the drop in Global PMX's long position.The idea behind Actron Technology and Global PMX 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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