Correlation Between EZconn Corp and PCL Technologies

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

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

Diversification Opportunities for EZconn Corp and PCL Technologies

0.66

Correlation Coefficient

EZconn Corp  PCL Technologies

Poor diversification

The 3 months correlation between EZconn and PCL is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding EZconn Corp and PCL Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCL Technologies and EZconn Corp 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 EZconn Corp are associated (or correlated) with PCL Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCL Technologies has no effect on the direction of EZconn Corp i.e., EZconn Corp and PCL Technologies go up and down completely randomly.

Pair Corralation between EZconn Corp and PCL Technologies

Assuming the 90 days trading horizon EZconn Corp is expected to generate 1.03 times more return on investment than PCL Technologies. However, EZconn Corp is 1.03 times more volatile than PCL Technologies. It trades about 0.25 of its potential returns per unit of risk. PCL Technologies is currently generating about 0.13 per unit of risk. If you would invest  34,800  in EZconn Corp on September 15, 2024 and sell it today you would earn a total of  27,900  from holding EZconn Corp or generate 80.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

EZconn Corp  vs.  PCL Technologies

EZconn Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EZconn Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, EZconn Corp showed solid returns over the last few months and may actually be approaching a breakup point.

PCL Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PCL Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, PCL Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EZconn Corp and PCL Technologies

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

The idea behind EZconn Corp and PCL Technologies 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.