Correlation Between CU Tech and PNC Technologies

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

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

Diversification Opportunities for CU Tech and PNC Technologies

-0.45

Correlation Coefficient

CU Tech  PNC Technologies

Very good diversification

The 3 months correlation between 376290 and PNC is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding CU Tech Corp and PNC Technologies co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC Technologies and CU 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 CU Tech Corp are associated (or correlated) with PNC Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PNC Technologies has no effect on the direction of CU Tech i.e., CU Tech and PNC Technologies go up and down completely randomly.

Pair Corralation between CU Tech and PNC Technologies

Assuming the 90 days trading horizon CU Tech Corp is expected to generate 0.86 times more return on investment than PNC Technologies. However, CU Tech Corp is 1.17 times less risky than PNC Technologies. It trades about 0.16 of its potential returns per unit of risk. PNC Technologies co is currently generating about -0.13 per unit of risk. If you would invest  286,500  in CU Tech Corp on December 28, 2024 and sell it today you would earn a total of  34,000  from holding CU Tech Corp or generate 11.87% return on investment over 90 days.

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

CU Tech Corp  vs.  PNC Technologies co

CU Tech Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CU Tech Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CU Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

PNC Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days PNC Technologies 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.

Pair Trading with CU Tech and PNC Technologies

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

The idea behind CU Tech Corp and PNC Technologies 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.