Correlation Between Pfeiffer Vacuum and GSTechnologies

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

By analyzing existing cross correlation between Pfeiffer Vacuum Technology and GSTechnologies, you can compare the effects of market volatilities on Pfeiffer Vacuum and GSTechnologies 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 Pfeiffer Vacuum with a short position of GSTechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfeiffer Vacuum and GSTechnologies.

Diversification Opportunities for Pfeiffer Vacuum and GSTechnologies

-0.43

Correlation Coefficient

Pfeiffer Vacuum  GSTechnologies

Very good diversification

The 3 months correlation between Pfeiffer and GSTechnologies is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Pfeiffer Vacuum Technology and GSTechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSTechnologies and Pfeiffer Vacuum 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 Pfeiffer Vacuum Technology are associated (or correlated) with GSTechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSTechnologies has no effect on the direction of Pfeiffer Vacuum i.e., Pfeiffer Vacuum and GSTechnologies go up and down completely randomly.

Pair Corralation between Pfeiffer Vacuum and GSTechnologies

Assuming the 90 days trading horizon Pfeiffer Vacuum is expected to generate 3.01 times less return on investment than GSTechnologies. But when comparing it to its historical volatility, Pfeiffer Vacuum Technology is 18.98 times less risky than GSTechnologies. It trades about 0.08 of its potential returns per unit of risk. GSTechnologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  220.00  in GSTechnologies on December 27, 2024 and sell it today you would lose (22.00) from holding GSTechnologies or give up 10.0% of portfolio value over 90 days.

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

Pfeiffer Vacuum Technology  vs.  GSTechnologies

Pfeiffer Vacuum Tech

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pfeiffer Vacuum Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pfeiffer Vacuum is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

GSTechnologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days GSTechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, GSTechnologies is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Pfeiffer Vacuum and GSTechnologies

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

The idea behind Pfeiffer Vacuum Technology and GSTechnologies 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..