Correlation Between Posiflex Technology and Datavan International

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

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

Diversification Opportunities for Posiflex Technology and Datavan International

0.48

Correlation Coefficient

Posiflex Technology  Datavan International

Very weak diversification

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

Pair Corralation between Posiflex Technology and Datavan International

Assuming the 90 days trading horizon Posiflex Technology is expected to generate 0.72 times more return on investment than Datavan International. However, Posiflex Technology is 1.4 times less risky than Datavan International. It trades about 0.11 of its potential returns per unit of risk. Datavan International is currently generating about 0.0 per unit of risk. If you would invest  11,750  in Posiflex Technology on October 23, 2024 and sell it today you would earn a total of  22,000  from holding Posiflex Technology or generate 187.23% return on investment over 90 days.

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

Posiflex Technology  vs.  Datavan International

Posiflex Technology

Risk-Adjusted Performance

19 of 100

Solid

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

Datavan International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Datavan International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Datavan International 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 Datavan International

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

The idea behind Posiflex Technology and Datavan International 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.