Correlation Between Pressure Technologies and GRIT Real
Can any of the company-specific risk be diversified away by investing in both Pressure Technologies and GRIT Real 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 GRIT Real 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 GRIT Real Estate, you can compare the effects of market volatilities on Pressure Technologies and GRIT Real 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 GRIT Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pressure Technologies and GRIT Real.
Diversification Opportunities for Pressure Technologies and GRIT Real
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pressure and GRIT is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pressure Technologies Plc and GRIT Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRIT Real Estate 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 GRIT Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRIT Real Estate has no effect on the direction of Pressure Technologies i.e., Pressure Technologies and GRIT Real go up and down completely randomly.
Pair Corralation between Pressure Technologies and GRIT Real
Assuming the 90 days trading horizon Pressure Technologies Plc is expected to generate 0.48 times more return on investment than GRIT Real. However, Pressure Technologies Plc is 2.07 times less risky than GRIT Real. It trades about -0.43 of its potential returns per unit of risk. GRIT Real Estate is currently generating about -0.3 per unit of risk. If you would invest 3,400 in Pressure Technologies Plc on December 8, 2024 and sell it today you would lose (300.00) from holding Pressure Technologies Plc or give up 8.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pressure Technologies Plc vs. GRIT Real Estate
Performance |
| Timeline |
| Pressure Technologies Plc |
| GRIT Real Estate |
Pressure Technologies and GRIT Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pressure Technologies and GRIT Real
The main advantage of trading using opposite Pressure Technologies and GRIT Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pressure Technologies position performs unexpectedly, GRIT Real 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 GRIT Real will offset losses from the drop in GRIT Real's long position.The idea behind Pressure Technologies Plc and GRIT Real Estate 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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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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