Correlation Between GS Engineering and PNC Technologies

Can any of the company-specific risk be diversified away by investing in both GS Engineering and PNC Technologies 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 GS Engineering and PNC Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GS Engineering Construction and PNC Technologies co, you can compare the effects of market volatilities on GS Engineering and PNC Technologies 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 GS Engineering with a short position of PNC Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Engineering and PNC Technologies.

Diversification Opportunities for GS Engineering and PNC Technologies

0.05

Correlation Coefficient

GS Engineering  PNC Technologies

Significant diversification

The 3 months correlation between 006360 and PNC is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding GS Engineering Construction and PNC Technologies co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC Technologies and GS Engineering 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 GS Engineering Construction are associated (or correlated) with PNC Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PNC Technologies has no effect on the direction of GS Engineering i.e., GS Engineering and PNC Technologies go up and down completely randomly.

Pair Corralation between GS Engineering and PNC Technologies

Assuming the 90 days trading horizon GS Engineering Construction is expected to under-perform the PNC Technologies. But the stock apears to be less risky and, when comparing its historical volatility, GS Engineering Construction is 1.07 times less risky than PNC Technologies. The stock trades about -0.04 of its potential returns per unit of risk. The PNC Technologies co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  405,500  in PNC Technologies co on September 22, 2024 and sell it today you would earn a total of  2,500  from holding PNC Technologies co or generate 0.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GS Engineering Construction  vs.  PNC Technologies co

GS Engineering Const

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GS Engineering Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GS Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PNC Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PNC Technologies co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with GS Engineering and PNC Technologies

The main advantage of trading using opposite GS Engineering and PNC Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GS Engineering position performs unexpectedly, PNC Technologies 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 PNC Technologies will offset losses from the drop in PNC Technologies' long position.

The idea behind GS Engineering Construction and PNC Technologies co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.