Correlation Between PKSHA TECHNOLOGY and BP PLC

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

By analyzing existing cross correlation between PKSHA TECHNOLOGY INC and BP PLC DZ1, you can compare the effects of market volatilities on PKSHA TECHNOLOGY and BP PLC 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 PKSHA TECHNOLOGY with a short position of BP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PKSHA TECHNOLOGY and BP PLC.

Diversification Opportunities for PKSHA TECHNOLOGY and BP PLC

0.29

Correlation Coefficient

PKSHA TECHNOLOGY  BP PLC

Modest diversification

The 3 months correlation between PKSHA and BPE is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding PKSHA TECHNOLOGY INC and BP PLC DZ1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC DZ1 and PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY INC are associated (or correlated) with BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC DZ1 has no effect on the direction of PKSHA TECHNOLOGY i.e., PKSHA TECHNOLOGY and BP PLC go up and down completely randomly.

Pair Corralation between PKSHA TECHNOLOGY and BP PLC

Assuming the 90 days horizon PKSHA TECHNOLOGY INC is expected to under-perform the BP PLC. In addition to that, PKSHA TECHNOLOGY is 1.54 times more volatile than BP PLC DZ1. It trades about -0.07 of its total potential returns per unit of risk. BP PLC DZ1 is currently generating about 0.08 per unit of volatility. If you would invest  457.00  in BP PLC DZ1 on December 19, 2024 and sell it today you would earn a total of  47.00  from holding BP PLC DZ1 or generate 10.28% return on investment over 90 days.

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

PKSHA TECHNOLOGY INC  vs.  BP PLC DZ1

PKSHA TECHNOLOGY INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days PKSHA TECHNOLOGY INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

BP PLC DZ1

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BP PLC DZ1 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BP PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PKSHA TECHNOLOGY and BP PLC

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

The idea behind PKSHA TECHNOLOGY INC and BP PLC DZ1 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.