Correlation Between Bel Fuse and Palladyne

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

By analyzing existing cross correlation between Bel Fuse A and Palladyne AI Corp, you can compare the effects of market volatilities on Bel Fuse and Palladyne 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 Bel Fuse with a short position of Palladyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bel Fuse and Palladyne.

Diversification Opportunities for Bel Fuse and Palladyne

-0.68

Correlation Coefficient

Bel Fuse  Palladyne

Excellent diversification

The 3 months correlation between Bel and Palladyne is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse A and Palladyne AI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palladyne AI Corp and Bel Fuse 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 Bel Fuse A are associated (or correlated) with Palladyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palladyne AI Corp has no effect on the direction of Bel Fuse i.e., Bel Fuse and Palladyne go up and down completely randomly.

Pair Corralation between Bel Fuse and Palladyne

Assuming the 90 days horizon Bel Fuse A is expected to under-perform the Palladyne. But the stock apears to be less risky and, when comparing its historical volatility, Bel Fuse A is 8.4 times less risky than Palladyne. The stock trades about -0.06 of its potential returns per unit of risk. The Palladyne AI Corp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  359.00  in Palladyne AI Corp on October 23, 2024 and sell it today you would earn a total of  410.00  from holding Palladyne AI Corp or generate 114.21% return on investment over 90 days.

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

Bel Fuse A  vs.  Palladyne AI Corp

Bel Fuse A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bel Fuse A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Palladyne AI Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Palladyne AI Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Palladyne displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bel Fuse and Palladyne

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

The idea behind Bel Fuse A and Palladyne AI 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.