Correlation Between Powertech Industrial and K Way

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

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

Diversification Opportunities for Powertech Industrial and K Way

0.37

Correlation Coefficient

Powertech Industrial  K Way

Weak diversification

The 3 months correlation between Powertech and 5201 is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Powertech Industrial Co and K Way Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Way Information and Powertech Industrial 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 Powertech Industrial Co are associated (or correlated) with K Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Way Information has no effect on the direction of Powertech Industrial i.e., Powertech Industrial and K Way go up and down completely randomly.

Pair Corralation between Powertech Industrial and K Way

Assuming the 90 days trading horizon Powertech Industrial Co is expected to under-perform the K Way. In addition to that, Powertech Industrial is 2.33 times more volatile than K Way Information. It trades about -0.01 of its total potential returns per unit of risk. K Way Information is currently generating about 0.04 per unit of volatility. If you would invest  2,800  in K Way Information on October 26, 2024 and sell it today you would earn a total of  90.00  from holding K Way Information or generate 3.21% return on investment over 90 days.

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

Powertech Industrial Co  vs.  K Way Information

Powertech Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Powertech Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Powertech Industrial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

K Way Information

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in K Way Information are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, K Way is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Powertech Industrial and K Way

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

The idea behind Powertech Industrial Co and K Way Information 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.