Correlation Between PIE Industrial and PESTECH International

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

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

Diversification Opportunities for PIE Industrial and PESTECH International

0.48

Correlation Coefficient

PIE Industrial  PESTECH International

Very weak diversification

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

Pair Corralation between PIE Industrial and PESTECH International

Assuming the 90 days trading horizon PIE Industrial Bhd is expected to generate 0.49 times more return on investment than PESTECH International. However, PIE Industrial Bhd is 2.03 times less risky than PESTECH International. It trades about 0.08 of its potential returns per unit of risk. PESTECH International Bhd is currently generating about 0.0 per unit of risk. If you would invest  288.00  in PIE Industrial Bhd on October 10, 2024 and sell it today you would earn a total of  342.00  from holding PIE Industrial Bhd or generate 118.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

PIE Industrial Bhd  vs.  PESTECH International Bhd

PIE Industrial Bhd

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PIE Industrial Bhd are ranked lower than 11 (%) 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.

PESTECH International Bhd

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PESTECH International Bhd are ranked lower than 11 (%) 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.

Pair Trading with PIE Industrial and PESTECH International

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

The idea behind PIE Industrial Bhd and PESTECH International 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.