Correlation Between AAA Technologies and PYRAMID TECHNOPLAST

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

By analyzing existing cross correlation between AAA Technologies Limited and PYRAMID TECHNOPLAST ORD, you can compare the effects of market volatilities on AAA Technologies and PYRAMID TECHNOPLAST 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 AAA Technologies with a short position of PYRAMID TECHNOPLAST. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAA Technologies and PYRAMID TECHNOPLAST.

Diversification Opportunities for AAA Technologies and PYRAMID TECHNOPLAST

-0.33

Correlation Coefficient

AAA Technologies  PYRAMID TECHNOPLAST

Very good diversification

The 3 months correlation between AAA and PYRAMID is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding AAA Technologies Limited and PYRAMID TECHNOPLAST ORD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PYRAMID TECHNOPLAST ORD and AAA Technologies 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 AAA Technologies Limited are associated (or correlated) with PYRAMID TECHNOPLAST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PYRAMID TECHNOPLAST ORD has no effect on the direction of AAA Technologies i.e., AAA Technologies and PYRAMID TECHNOPLAST go up and down completely randomly.

Pair Corralation between AAA Technologies and PYRAMID TECHNOPLAST

Assuming the 90 days trading horizon AAA Technologies Limited is expected to under-perform the PYRAMID TECHNOPLAST. But the stock apears to be less risky and, when comparing its historical volatility, AAA Technologies Limited is 1.9 times less risky than PYRAMID TECHNOPLAST. The stock trades about -0.07 of its potential returns per unit of risk. The PYRAMID TECHNOPLAST ORD is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  20,837  in PYRAMID TECHNOPLAST ORD on August 31, 2024 and sell it today you would lose (96.00) from holding PYRAMID TECHNOPLAST ORD or give up 0.46% of portfolio value over 90 days.

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

AAA Technologies Limited  vs.  PYRAMID TECHNOPLAST ORD

AAA Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AAA Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, AAA Technologies is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

PYRAMID TECHNOPLAST ORD

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PYRAMID TECHNOPLAST ORD are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating primary indicators, PYRAMID TECHNOPLAST exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AAA Technologies and PYRAMID TECHNOPLAST

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

The idea behind AAA Technologies Limited and PYRAMID TECHNOPLAST ORD 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.