Correlation Between ADX and PCF Group
Can any of the company-specific risk be diversified away by investing in both ADX and PCF Group 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 ADX and PCF Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADX and PCF Group SA, you can compare the effects of market volatilities on ADX and PCF Group 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 ADX with a short position of PCF Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADX and PCF Group.
Diversification Opportunities for ADX and PCF Group
Poor diversification
The 3 months correlation between ADX and PCF is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ADX and PCF Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCF Group SA and ADX 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 ADX are associated (or correlated) with PCF Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCF Group SA has no effect on the direction of ADX i.e., ADX and PCF Group go up and down completely randomly.
Pair Corralation between ADX and PCF Group
Assuming the 90 days trading horizon ADX is expected to generate 0.71 times more return on investment than PCF Group. However, ADX is 1.41 times less risky than PCF Group. It trades about 0.09 of its potential returns per unit of risk. PCF Group SA is currently generating about -0.34 per unit of risk. If you would invest 25.00 in ADX on August 31, 2024 and sell it today you would earn a total of 1.00 from holding ADX or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 75.0% |
| Values | Daily Returns |
ADX vs. PCF Group SA
Performance |
| Timeline |
| ADX |
| PCF Group SA |
ADX and PCF Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADX and PCF Group
The main advantage of trading using opposite ADX and PCF Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADX position performs unexpectedly, PCF Group 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 PCF Group will offset losses from the drop in PCF Group's long position.The idea behind ADX and PCF Group SA 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.| PCF Group vs. Medicofarma Biotech SA | PCF Group vs. Logintrade SA | PCF Group vs. Saule Technologies SA | PCF Group vs. Monnari Trade SA |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |