Correlation Between DICKER DATA and PKSHA TECHNOLOGY

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

By analyzing existing cross correlation between DICKER DATA LTD and PKSHA TECHNOLOGY INC, you can compare the effects of market volatilities on DICKER DATA and PKSHA TECHNOLOGY 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 DICKER DATA with a short position of PKSHA TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of DICKER DATA and PKSHA TECHNOLOGY.

Diversification Opportunities for DICKER DATA and PKSHA TECHNOLOGY

-0.36

Correlation Coefficient

DICKER DATA  PKSHA TECHNOLOGY

Very good diversification

The 3 months correlation between DICKER and PKSHA is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding DICKER DATA LTD and PKSHA TECHNOLOGY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PKSHA TECHNOLOGY INC and DICKER DATA 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 DICKER DATA LTD are associated (or correlated) with PKSHA TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PKSHA TECHNOLOGY INC has no effect on the direction of DICKER DATA i.e., DICKER DATA and PKSHA TECHNOLOGY go up and down completely randomly.

Pair Corralation between DICKER DATA and PKSHA TECHNOLOGY

Assuming the 90 days horizon DICKER DATA LTD is expected to under-perform the PKSHA TECHNOLOGY. But the stock apears to be less risky and, when comparing its historical volatility, DICKER DATA LTD is 1.69 times less risky than PKSHA TECHNOLOGY. The stock trades about -0.03 of its potential returns per unit of risk. The PKSHA TECHNOLOGY INC is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,140  in PKSHA TECHNOLOGY INC on September 19, 2024 and sell it today you would earn a total of  280.00  from holding PKSHA TECHNOLOGY INC or generate 13.08% return on investment over 90 days.

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

DICKER DATA LTD  vs.  PKSHA TECHNOLOGY INC

DICKER DATA LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DICKER DATA LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DICKER DATA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PKSHA TECHNOLOGY INC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PKSHA TECHNOLOGY INC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PKSHA TECHNOLOGY reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DICKER DATA and PKSHA TECHNOLOGY

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

The idea behind DICKER DATA LTD and PKSHA TECHNOLOGY INC 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.