Correlation Between Posiflex Technology and Cayenne Entertainment

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

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

Diversification Opportunities for Posiflex Technology and Cayenne Entertainment

-0.36

Correlation Coefficient

Posiflex Technology  Cayenne Entertainment

Very good diversification

The 3 months correlation between Posiflex and Cayenne is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Posiflex Technology and Cayenne Entertainment Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cayenne Entertainment 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 Cayenne Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cayenne Entertainment has no effect on the direction of Posiflex Technology i.e., Posiflex Technology and Cayenne Entertainment go up and down completely randomly.

Pair Corralation between Posiflex Technology and Cayenne Entertainment

Assuming the 90 days trading horizon Posiflex Technology is expected to generate 1903.76 times less return on investment than Cayenne Entertainment. But when comparing it to its historical volatility, Posiflex Technology is 1.73 times less risky than Cayenne Entertainment. It trades about 0.0 of its potential returns per unit of risk. Cayenne Entertainment Technology is currently generating about 0.54 of returns per unit of risk over similar time horizon. If you would invest  3,870  in Cayenne Entertainment Technology on December 4, 2024 and sell it today you would earn a total of  3,430  from holding Cayenne Entertainment Technology or generate 88.63% return on investment over 90 days.

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

Posiflex Technology  vs.  Cayenne Entertainment Technolo

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Cayenne Entertainment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cayenne Entertainment Technology are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cayenne Entertainment showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Posiflex Technology and Cayenne Entertainment

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

The idea behind Posiflex Technology and Cayenne Entertainment Technology 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.