Correlation Between Parade Technologies and Primax Electronics

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

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

Diversification Opportunities for Parade Technologies and Primax Electronics

-0.65

Correlation Coefficient

Parade Technologies  Primax Electronics

Excellent diversification

The 3 months correlation between Parade and Primax is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Parade Technologies and Primax Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primax Electronics and Parade Technologies 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 Parade Technologies are associated (or correlated) with Primax Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primax Electronics has no effect on the direction of Parade Technologies i.e., Parade Technologies and Primax Electronics go up and down completely randomly.

Pair Corralation between Parade Technologies and Primax Electronics

Assuming the 90 days trading horizon Parade Technologies is expected to under-perform the Primax Electronics. In addition to that, Parade Technologies is 1.12 times more volatile than Primax Electronics. It trades about -0.15 of its total potential returns per unit of risk. Primax Electronics is currently generating about 0.11 per unit of volatility. If you would invest  7,710  in Primax Electronics on December 28, 2024 and sell it today you would earn a total of  800.00  from holding Primax Electronics or generate 10.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.21%
Values	Daily Returns

Parade Technologies  vs.  Primax Electronics

Parade Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Parade Technologies 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Primax Electronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Primax Electronics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Primax Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Parade Technologies and Primax Electronics

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

The idea behind Parade Technologies and Primax Electronics 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..