Correlation Between Pontex Polyblend and Gigastorage Corp

Can any of the company-specific risk be diversified away by investing in both Pontex Polyblend and Gigastorage Corp 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 Gigastorage Corp 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 Gigastorage Corp, you can compare the effects of market volatilities on Pontex Polyblend and Gigastorage Corp 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 Gigastorage Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pontex Polyblend and Gigastorage Corp.

Diversification Opportunities for Pontex Polyblend and Gigastorage Corp

-0.66

Correlation Coefficient

Pontex Polyblend  Gigastorage Corp

Excellent diversification

The 3 months correlation between Pontex and Gigastorage is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Pontex Polyblend CoLtd and Gigastorage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gigastorage Corp 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 Gigastorage Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gigastorage Corp has no effect on the direction of Pontex Polyblend i.e., Pontex Polyblend and Gigastorage Corp go up and down completely randomly.

Pair Corralation between Pontex Polyblend and Gigastorage Corp

Assuming the 90 days trading horizon Pontex Polyblend CoLtd is expected to generate 1.18 times more return on investment than Gigastorage Corp. However, Pontex Polyblend is 1.18 times more volatile than Gigastorage Corp. It trades about -0.26 of its potential returns per unit of risk. Gigastorage Corp is currently generating about -0.46 per unit of risk. If you would invest  2,260  in Pontex Polyblend CoLtd on September 25, 2024 and sell it today you would lose (245.00) from holding Pontex Polyblend CoLtd or give up 10.84% of portfolio value over 90 days.

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

Pontex Polyblend CoLtd  vs.  Gigastorage Corp

Pontex Polyblend CoLtd

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pontex Polyblend CoLtd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Pontex Polyblend is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Gigastorage Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gigastorage Corp 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Pontex Polyblend and Gigastorage Corp

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

The idea behind Pontex Polyblend CoLtd and Gigastorage Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.