Correlation Between PESTECH International and PIE Industrial

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

By analyzing existing cross correlation between PESTECH International Bhd and PIE Industrial Bhd, you can compare the effects of market volatilities on PESTECH International and PIE Industrial 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 PESTECH International with a short position of PIE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PESTECH International and PIE Industrial.

Diversification Opportunities for PESTECH International and PIE Industrial

0.48

Correlation Coefficient

PESTECH International  PIE Industrial

Very weak diversification

The 3 months correlation between PESTECH and PIE is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding PESTECH International Bhd and PIE Industrial Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIE Industrial Bhd and PESTECH International 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 PESTECH International Bhd are associated (or correlated) with PIE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIE Industrial Bhd has no effect on the direction of PESTECH International i.e., PESTECH International and PIE Industrial go up and down completely randomly.

Pair Corralation between PESTECH International and PIE Industrial

Assuming the 90 days trading horizon PESTECH International Bhd is expected to generate 4.8 times more return on investment than PIE Industrial. However, PESTECH International is 4.8 times more volatile than PIE Industrial Bhd. It trades about 0.4 of its potential returns per unit of risk. PIE Industrial Bhd is currently generating about 0.1 per unit of risk. If you would invest  13.00  in PESTECH International Bhd on October 10, 2024 and sell it today you would earn a total of  8.00  from holding PESTECH International Bhd or generate 61.54% return on investment over 90 days.

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

PESTECH International Bhd  vs.  PIE Industrial Bhd

PESTECH International Bhd

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PESTECH International Bhd are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, PESTECH International disclosed solid returns over the last few months and may actually be approaching a breakup point.

PIE Industrial Bhd

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PIE Industrial Bhd are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, PIE Industrial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PESTECH International and PIE Industrial

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

The idea behind PESTECH International Bhd and PIE Industrial Bhd 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.