Correlation Between BH and PNC Technologies

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

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

Diversification Opportunities for BH and PNC Technologies

0.37

Correlation Coefficient

BH  PNC Technologies

Weak diversification

The 3 months correlation between BH and PNC is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding BH Co and PNC Technologies co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC Technologies and BH 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 BH Co 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 BH i.e., BH and PNC Technologies go up and down completely randomly.

Pair Corralation between BH and PNC Technologies

Assuming the 90 days trading horizon BH Co is expected to generate 1.05 times more return on investment than PNC Technologies. However, BH is 1.05 times more volatile than PNC Technologies co. It trades about 0.08 of its potential returns per unit of risk. PNC Technologies co is currently generating about -0.03 per unit of risk. If you would invest  1,589,257  in BH Co on October 7, 2024 and sell it today you would earn a total of  135,743  from holding BH Co or generate 8.54% return on investment over 90 days.

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

BH Co  vs.  PNC Technologies co

BH Co

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BH Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BH 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 BH and PNC Technologies

The main advantage of trading using opposite BH and PNC Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BH 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 BH Co 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.