Correlation Between PCB Tec and Automatic Bank
Can any of the company-specific risk be diversified away by investing in both PCB Tec and Automatic Bank 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 PCB Tec and Automatic Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PCB Tec and Automatic Bank Services, you can compare the effects of market volatilities on PCB Tec and Automatic Bank 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 PCB Tec with a short position of Automatic Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of PCB Tec and Automatic Bank.
Diversification Opportunities for PCB Tec and Automatic Bank
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PCB and Automatic is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding PCB Tec and Automatic Bank Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Bank Services and PCB Tec 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 PCB Tec are associated (or correlated) with Automatic Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Bank Services has no effect on the direction of PCB Tec i.e., PCB Tec and Automatic Bank go up and down completely randomly.
Pair Corralation between PCB Tec and Automatic Bank
Assuming the 90 days trading horizon PCB Tec is expected to generate 1.71 times more return on investment than Automatic Bank. However, PCB Tec is 1.71 times more volatile than Automatic Bank Services. It trades about 0.09 of its potential returns per unit of risk. Automatic Bank Services is currently generating about 0.06 per unit of risk. If you would invest 28,059 in PCB Tec on August 28, 2024 and sell it today you would earn a total of 43,591 from holding PCB Tec or generate 155.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PCB Tec vs. Automatic Bank Services
Performance |
| Timeline |
| PCB Tec |
| Automatic Bank Services |
PCB Tec and Automatic Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PCB Tec and Automatic Bank
The main advantage of trading using opposite PCB Tec and Automatic Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PCB Tec position performs unexpectedly, Automatic Bank 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 Automatic Bank will offset losses from the drop in Automatic Bank's long position.| PCB Tec vs. Automatic Bank Services | PCB Tec vs. EN Shoham Business | PCB Tec vs. Rapac Communication Infrastructure | PCB Tec vs. Tadiran Hldg |
| Automatic Bank vs. Unitronics | Automatic Bank vs. PCB Tec | Automatic Bank vs. Tower Semiconductor | Automatic Bank vs. Priortech |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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