Correlation Between Pressure Technologies and EJF Investments
Can any of the company-specific risk be diversified away by investing in both Pressure Technologies and EJF Investments 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 Pressure Technologies and EJF Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pressure Technologies Plc and EJF Investments, you can compare the effects of market volatilities on Pressure Technologies and EJF Investments 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 Pressure Technologies with a short position of EJF Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pressure Technologies and EJF Investments.
Diversification Opportunities for Pressure Technologies and EJF Investments
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pressure and EJF is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Pressure Technologies Plc and EJF Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EJF Investments and Pressure 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 Pressure Technologies Plc are associated (or correlated) with EJF Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EJF Investments has no effect on the direction of Pressure Technologies i.e., Pressure Technologies and EJF Investments go up and down completely randomly.
Pair Corralation between Pressure Technologies and EJF Investments
Assuming the 90 days trading horizon Pressure Technologies Plc is expected to under-perform the EJF Investments. In addition to that, Pressure Technologies is 1.18 times more volatile than EJF Investments. It trades about -0.04 of its total potential returns per unit of risk. EJF Investments is currently generating about -0.01 per unit of volatility. If you would invest 11,900 in EJF Investments on November 6, 2024 and sell it today you would lose (100.00) from holding EJF Investments or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Pressure Technologies Plc vs. EJF Investments
Performance |
| Timeline |
| Pressure Technologies Plc |
| EJF Investments |
Pressure Technologies and EJF Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pressure Technologies and EJF Investments
The main advantage of trading using opposite Pressure Technologies and EJF Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pressure Technologies position performs unexpectedly, EJF Investments 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 EJF Investments will offset losses from the drop in EJF Investments' long position.| Pressure Technologies vs. Zoom Video Communications | Pressure Technologies vs. Endo International PLC | Pressure Technologies vs. Broadcom | Pressure Technologies vs. Victrex plc |
| EJF Investments vs. Scandinavian Tobacco Group | EJF Investments vs. Sligro Food Group | EJF Investments vs. Zurich Insurance Group | EJF Investments vs. Vienna Insurance Group |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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