Correlation Between PH Tech and LIG ES

Can any of the company-specific risk be diversified away by investing in both PH Tech and LIG ES 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 LIG ES 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 LIG ES SPAC, you can compare the effects of market volatilities on PH Tech and LIG ES 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 LIG ES. Check out your portfolio center. Please also check ongoing floating volatility patterns of PH Tech and LIG ES.

Diversification Opportunities for PH Tech and LIG ES

0.49

Correlation Coefficient

PH Tech  LIG ES

Very weak diversification

The 3 months correlation between 239890 and LIG is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding PH Tech Co and LIG ES SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIG ES SPAC 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 LIG ES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIG ES SPAC has no effect on the direction of PH Tech i.e., PH Tech and LIG ES go up and down completely randomly.

Pair Corralation between PH Tech and LIG ES

Assuming the 90 days trading horizon PH Tech Co is expected to generate 0.83 times more return on investment than LIG ES. However, PH Tech Co is 1.2 times less risky than LIG ES. It trades about 0.07 of its potential returns per unit of risk. LIG ES SPAC is currently generating about 0.0 per unit of risk. If you would invest  700,000  in PH Tech Co on October 26, 2024 and sell it today you would earn a total of  88,000  from holding PH Tech Co or generate 12.57% return on investment over 90 days.

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

PH Tech Co  vs.  LIG ES SPAC

PH Tech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PH Tech Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PH Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

LIG ES SPAC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PH Tech and LIG ES

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

The idea behind PH Tech Co and LIG ES SPAC 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.