Correlation Between Posiflex Technology and Shiny Chemical

Can any of the company-specific risk be diversified away by investing in both Posiflex Technology and Shiny Chemical 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 Posiflex Technology and Shiny Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Posiflex Technology and Shiny Chemical

0.37

Correlation Coefficient

Posiflex Technology  Shiny Chemical

Weak diversification

The 3 months correlation between Posiflex and Shiny is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Posiflex Technology and Shiny Chemical Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shiny Chemical Industrial and Posiflex 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 Posiflex Technology are associated (or correlated) with Shiny Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shiny Chemical Industrial has no effect on the direction of Posiflex Technology i.e., Posiflex Technology and Shiny Chemical go up and down completely randomly.

Pair Corralation between Posiflex Technology and Shiny Chemical

Assuming the 90 days trading horizon Posiflex Technology is expected to under-perform the Shiny Chemical. In addition to that, Posiflex Technology is 2.0 times more volatile than Shiny Chemical Industrial. It trades about -0.06 of its total potential returns per unit of risk. Shiny Chemical Industrial is currently generating about -0.06 per unit of volatility. If you would invest  15,950  in Shiny Chemical Industrial on December 22, 2024 and sell it today you would lose (950.00) from holding Shiny Chemical Industrial or give up 5.96% of portfolio value over 90 days.

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

Posiflex Technology  vs.  Shiny Chemical Industrial

Posiflex Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Posiflex Technology 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.

Shiny Chemical Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shiny Chemical Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shiny Chemical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Posiflex Technology and Shiny Chemical

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

The idea behind Posiflex Technology and Shiny Chemical Industrial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.