Correlation Between Dexon Technology and Premier Technology

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

By analyzing existing cross correlation between Dexon Technology PCL and Premier Technology Public, you can compare the effects of market volatilities on Dexon Technology and Premier 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 Dexon Technology with a short position of Premier Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dexon Technology and Premier Technology.

Diversification Opportunities for Dexon Technology and Premier Technology

0.33

Correlation Coefficient

Dexon Technology  Premier Technology

Weak diversification

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

Pair Corralation between Dexon Technology and Premier Technology

Assuming the 90 days trading horizon Dexon Technology is expected to generate 1.05 times less return on investment than Premier Technology. In addition to that, Dexon Technology is 1.0 times more volatile than Premier Technology Public. It trades about 0.05 of its total potential returns per unit of risk. Premier Technology Public is currently generating about 0.06 per unit of volatility. If you would invest  698.00  in Premier Technology Public on September 21, 2024 and sell it today you would earn a total of  217.00  from holding Premier Technology Public or generate 31.09% return on investment over 90 days.

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

Dexon Technology PCL  vs.  Premier Technology Public

Dexon Technology PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dexon Technology PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Premier Technology Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premier Technology Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Premier Technology is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Dexon Technology and Premier Technology

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

The idea behind Dexon Technology PCL and Premier Technology Public 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.