Correlation Between Pick N and THORNEY TECHS
Can any of the company-specific risk be diversified away by investing in both Pick N and THORNEY TECHS 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 Pick N and THORNEY TECHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pick n Pay and THORNEY TECHS LTD, you can compare the effects of market volatilities on Pick N and THORNEY TECHS 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 Pick N with a short position of THORNEY TECHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pick N and THORNEY TECHS.
Diversification Opportunities for Pick N and THORNEY TECHS
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pick and THORNEY is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pick n Pay and THORNEY TECHS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THORNEY TECHS LTD and Pick N 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 Pick n Pay are associated (or correlated) with THORNEY TECHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THORNEY TECHS LTD has no effect on the direction of Pick N i.e., Pick N and THORNEY TECHS go up and down completely randomly.
Pair Corralation between Pick N and THORNEY TECHS
Assuming the 90 days horizon Pick n Pay is expected to generate 0.78 times more return on investment than THORNEY TECHS. However, Pick n Pay is 1.28 times less risky than THORNEY TECHS. It trades about 0.06 of its potential returns per unit of risk. THORNEY TECHS LTD is currently generating about 0.02 per unit of risk. If you would invest 107.00 in Pick n Pay on September 3, 2024 and sell it today you would earn a total of 48.00 from holding Pick n Pay or generate 44.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pick n Pay vs. THORNEY TECHS LTD
Performance |
| Timeline |
| Pick n Pay |
| THORNEY TECHS LTD |
Pick N and THORNEY TECHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pick N and THORNEY TECHS
The main advantage of trading using opposite Pick N and THORNEY TECHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pick N position performs unexpectedly, THORNEY TECHS 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 THORNEY TECHS will offset losses from the drop in THORNEY TECHS's long position.| Pick N vs. AIR PRODCHEMICALS | Pick N vs. ELECTRONIC ARTS | Pick N vs. Meiko Electronics Co | Pick N vs. Methode Electronics |
| THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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