Correlation Between Promise Technology and Kedge Construction

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

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

Diversification Opportunities for Promise Technology and Kedge Construction

-0.44

Correlation Coefficient

Promise Technology  Kedge Construction

Very good diversification

The 3 months correlation between Promise and Kedge is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Promise Technology and Kedge Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kedge Construction and Promise Technology 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 Promise Technology are associated (or correlated) with Kedge Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kedge Construction has no effect on the direction of Promise Technology i.e., Promise Technology and Kedge Construction go up and down completely randomly.

Pair Corralation between Promise Technology and Kedge Construction

Assuming the 90 days trading horizon Promise Technology is expected to under-perform the Kedge Construction. But the stock apears to be less risky and, when comparing its historical volatility, Promise Technology is 1.1 times less risky than Kedge Construction. The stock trades about -0.12 of its potential returns per unit of risk. The Kedge Construction Co is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  7,080  in Kedge Construction Co on December 24, 2024 and sell it today you would earn a total of  1,390  from holding Kedge Construction Co or generate 19.63% return on investment over 90 days.

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

Promise Technology  vs.  Kedge Construction Co

Promise Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Promise Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Kedge Construction

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kedge Construction Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kedge Construction showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Promise Technology and Kedge Construction

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

The idea behind Promise Technology and Kedge Construction 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.