Correlation Between Park Electrochemical and Tel Instrument

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

Diversification Opportunities for Park Electrochemical and Tel Instrument

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Park and Tel is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Park Electrochemical and Tel Instrument Electronics Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tel Instrument Elect and Park Electrochemical 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 Park Electrochemical are associated (or correlated) with Tel Instrument. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tel Instrument Elect has no effect on the direction of Park Electrochemical i.e., Park Electrochemical and Tel Instrument go up and down completely randomly.

Pair Corralation between Park Electrochemical and Tel Instrument

If you would invest  1,312  in Park Electrochemical on August 25, 2024 and sell it today you would earn a total of  199.00  from holding Park Electrochemical or generate 15.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy2.22%
ValuesDaily Returns

Park Electrochemical  vs.  Tel Instrument Electronics Cor

 Performance 
       Timeline  
Park Electrochemical 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Park Electrochemical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking signals, Park Electrochemical may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Tel Instrument Elect 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tel Instrument Electronics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Tel Instrument is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Park Electrochemical and Tel Instrument Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Park Electrochemical and Tel Instrument

The main advantage of trading using opposite Park Electrochemical and Tel Instrument positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Electrochemical position performs unexpectedly, Tel Instrument 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 Tel Instrument will offset losses from the drop in Tel Instrument's long position.
The idea behind Park Electrochemical and Tel Instrument Electronics Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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