Correlation Between Daily Journal and PTC

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

By analyzing existing cross correlation between Daily Journal Corp and PTC Inc, you can compare the effects of market volatilities on Daily Journal and PTC 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 Daily Journal with a short position of PTC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daily Journal and PTC.

Diversification Opportunities for Daily Journal and PTC

0.69

Correlation Coefficient

Daily Journal  PTC

Poor diversification

The 3 months correlation between Daily and PTC is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Daily Journal Corp and PTC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC Inc and Daily Journal 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 Daily Journal Corp are associated (or correlated) with PTC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC Inc has no effect on the direction of Daily Journal i.e., Daily Journal and PTC go up and down completely randomly.

Pair Corralation between Daily Journal and PTC

Given the investment horizon of 90 days Daily Journal Corp is expected to generate 1.66 times more return on investment than PTC. However, Daily Journal is 1.66 times more volatile than PTC Inc. It trades about 0.04 of its potential returns per unit of risk. PTC Inc is currently generating about 0.04 per unit of risk. If you would invest  28,600  in Daily Journal Corp on December 27, 2024 and sell it today you would earn a total of  11,210  from holding Daily Journal Corp or generate 39.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.99%
Values	Daily Returns

Daily Journal Corp  vs.  PTC Inc

Daily Journal Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Daily Journal Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

PTC Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days PTC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Daily Journal and PTC

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

The idea behind Daily Journal Corp and PTC 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.