Correlation Between PH Tech and InfoBank

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

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

Diversification Opportunities for PH Tech and InfoBank

0.33

Correlation Coefficient

PH Tech  InfoBank

Weak diversification

The 3 months correlation between 239890 and InfoBank is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding PH Tech Co and InfoBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfoBank and PH Tech 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 PH Tech Co are associated (or correlated) with InfoBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfoBank has no effect on the direction of PH Tech i.e., PH Tech and InfoBank go up and down completely randomly.

Pair Corralation between PH Tech and InfoBank

Assuming the 90 days trading horizon PH Tech Co is expected to under-perform the InfoBank. But the stock apears to be less risky and, when comparing its historical volatility, PH Tech Co is 1.05 times less risky than InfoBank. The stock trades about -0.02 of its potential returns per unit of risk. The InfoBank is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,082,756  in InfoBank on October 4, 2024 and sell it today you would lose (278,756) from holding InfoBank or give up 25.75% of portfolio value over 90 days.

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

PH Tech Co  vs.  InfoBank

PH Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PH Tech 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.

InfoBank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in InfoBank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, InfoBank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PH Tech and InfoBank

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

The idea behind PH Tech Co and InfoBank 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.