Correlation Between Global PMX and Fittech

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

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

Diversification Opportunities for Global PMX and Fittech

0.68

Correlation Coefficient

Global PMX  Fittech

Poor diversification

The 3 months correlation between Global and Fittech is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Global PMX Co and Fittech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fittech and Global PMX 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 Global PMX Co are associated (or correlated) with Fittech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fittech has no effect on the direction of Global PMX i.e., Global PMX and Fittech go up and down completely randomly.

Pair Corralation between Global PMX and Fittech

Assuming the 90 days trading horizon Global PMX is expected to generate 11.47 times less return on investment than Fittech. But when comparing it to its historical volatility, Global PMX Co is 1.33 times less risky than Fittech. It trades about 0.01 of its potential returns per unit of risk. Fittech Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  11,000  in Fittech Co on September 24, 2024 and sell it today you would earn a total of  2,550  from holding Fittech Co or generate 23.18% return on investment over 90 days.

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

Global PMX Co  vs.  Fittech Co

Global PMX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global PMX Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Fittech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fittech Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Global PMX and Fittech

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

The idea behind Global PMX Co and Fittech 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.