Correlation Between Making Science and Plant Advanced

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

By analyzing existing cross correlation between Making Science Group and Plant Advanced Technologies, you can compare the effects of market volatilities on Making Science and Plant Advanced 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 Making Science with a short position of Plant Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Making Science and Plant Advanced.

Diversification Opportunities for Making Science and Plant Advanced

0.52

Correlation Coefficient

Making Science  Plant Advanced

Very weak diversification

The 3 months correlation between Making and Plant is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Making Science Group and Plant Advanced Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plant Advanced Techn and Making Science 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 Making Science Group are associated (or correlated) with Plant Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plant Advanced Techn has no effect on the direction of Making Science i.e., Making Science and Plant Advanced go up and down completely randomly.

Pair Corralation between Making Science and Plant Advanced

Assuming the 90 days trading horizon Making Science Group is expected to generate 0.55 times more return on investment than Plant Advanced. However, Making Science Group is 1.81 times less risky than Plant Advanced. It trades about -0.21 of its potential returns per unit of risk. Plant Advanced Technologies is currently generating about -0.13 per unit of risk. If you would invest  925.00  in Making Science Group on October 25, 2024 and sell it today you would lose (140.00) from holding Making Science Group or give up 15.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Making Science Group  vs.  Plant Advanced Technologies

Making Science Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Making Science Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Plant Advanced Techn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plant Advanced Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Making Science and Plant Advanced

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

The idea behind Making Science Group and Plant Advanced Technologies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.