Correlation Between Power Financial and Pollard Banknote

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

Diversification Opportunities for Power Financial and Pollard Banknote

PowerPollardDiversified AwayPowerPollardDiversified Away100%
0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Power and Pollard is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Power Financial Corp and Pollard Banknote Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pollard Banknote and Power Financial 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 Power Financial Corp are associated (or correlated) with Pollard Banknote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pollard Banknote has no effect on the direction of Power Financial i.e., Power Financial and Pollard Banknote go up and down completely randomly.

Pair Corralation between Power Financial and Pollard Banknote

Assuming the 90 days trading horizon Power Financial Corp is expected to generate 0.22 times more return on investment than Pollard Banknote. However, Power Financial Corp is 4.48 times less risky than Pollard Banknote. It trades about 0.12 of its potential returns per unit of risk. Pollard Banknote Limited is currently generating about -0.1 per unit of risk. If you would invest  2,431  in Power Financial Corp on November 25, 2024 and sell it today you would earn a total of  34.00  from holding Power Financial Corp or generate 1.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Power Financial Corp  vs.  Pollard Banknote Limited

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-5051015
JavaScript chart by amCharts 3.21.15PWF-PG PBL
       Timeline  
Power Financial Corp 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Power Financial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Power Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb23.82424.224.424.624.825
Pollard Banknote 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Pollard Banknote Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Pollard Banknote may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2324252627282930

Power Financial and Pollard Banknote Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.79-1.32-0.85-0.380.03940.480.951.421.89 0.20.40.60.81.01.2
JavaScript chart by amCharts 3.21.15PWF-PG PBL
       Returns  

Pair Trading with Power Financial and Pollard Banknote

The main advantage of trading using opposite Power Financial and Pollard Banknote positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Financial position performs unexpectedly, Pollard Banknote 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 Pollard Banknote will offset losses from the drop in Pollard Banknote's long position.
The idea behind Power Financial Corp and Pollard Banknote Limited 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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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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