Correlation Between Evertz Technologies and Pollard Banknote

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Can any of the company-specific risk be diversified away by investing in both Evertz Technologies and Pollard Banknote 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 Evertz Technologies and Pollard Banknote into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evertz Technologies Limited and Pollard Banknote Limited, you can compare the effects of market volatilities on Evertz Technologies and Pollard Banknote 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 Evertz Technologies with a short position of Pollard Banknote. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evertz Technologies and Pollard Banknote.

Diversification Opportunities for Evertz Technologies and Pollard Banknote

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between Evertz and Pollard is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Evertz Technologies Limited and Pollard Banknote Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pollard Banknote and Evertz Technologies 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 Evertz Technologies Limited are associated (or correlated) with Pollard Banknote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pollard Banknote has no effect on the direction of Evertz Technologies i.e., Evertz Technologies and Pollard Banknote go up and down completely randomly.

Pair Corralation between Evertz Technologies and Pollard Banknote

Assuming the 90 days horizon Evertz Technologies is expected to generate 3.3 times less return on investment than Pollard Banknote. But when comparing it to its historical volatility, Evertz Technologies Limited is 1.33 times less risky than Pollard Banknote. It trades about 0.02 of its potential returns per unit of risk. Pollard Banknote Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,776  in Pollard Banknote Limited on August 28, 2024 and sell it today you would earn a total of  789.00  from holding Pollard Banknote Limited or generate 44.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Evertz Technologies Limited  vs.  Pollard Banknote Limited

 Performance 
       Timeline  
Evertz Technologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Evertz Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Evertz Technologies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Pollard Banknote 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Pollard Banknote Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Pollard Banknote is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Evertz Technologies and Pollard Banknote Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Evertz Technologies and Pollard Banknote

The main advantage of trading using opposite Evertz Technologies and Pollard Banknote positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evertz Technologies position performs unexpectedly, Pollard Banknote 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 Pollard Banknote will offset losses from the drop in Pollard Banknote's long position.
The idea behind Evertz Technologies Limited and Pollard Banknote Limited 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.
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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