Correlation Between Pontex Polyblend and Microelectronics

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

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

Diversification Opportunities for Pontex Polyblend and Microelectronics

0.35

Correlation Coefficient

Pontex Polyblend  Microelectronics

Weak diversification

The 3 months correlation between Pontex and Microelectronics is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pontex Polyblend CoLtd and Microelectronics Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microelectronics Tec and Pontex Polyblend 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 Pontex Polyblend CoLtd are associated (or correlated) with Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microelectronics Tec has no effect on the direction of Pontex Polyblend i.e., Pontex Polyblend and Microelectronics go up and down completely randomly.

Pair Corralation between Pontex Polyblend and Microelectronics

Assuming the 90 days trading horizon Pontex Polyblend is expected to generate 1.51 times less return on investment than Microelectronics. But when comparing it to its historical volatility, Pontex Polyblend CoLtd is 1.16 times less risky than Microelectronics. It trades about 0.1 of its potential returns per unit of risk. Microelectronics Technology is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,870  in Microelectronics Technology on October 9, 2024 and sell it today you would earn a total of  820.00  from holding Microelectronics Technology or generate 28.57% return on investment over 90 days.

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

Pontex Polyblend CoLtd  vs.  Microelectronics Technology

Pontex Polyblend CoLtd

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pontex Polyblend CoLtd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Pontex Polyblend showed solid returns over the last few months and may actually be approaching a breakup point.

Microelectronics Tec

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microelectronics Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Microelectronics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pontex Polyblend and Microelectronics

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

The idea behind Pontex Polyblend CoLtd and Microelectronics 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.