Correlation Between DAX Index and PKSHA TECHNOLOGY

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

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

Diversification Opportunities for DAX Index and PKSHA TECHNOLOGY

-0.2

Correlation Coefficient

DAX Index  PKSHA TECHNOLOGY

Good diversification

The 3 months correlation between DAX and PKSHA is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index 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 DAX Index 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 DAX Index 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 DAX Index i.e., DAX Index and PKSHA TECHNOLOGY go up and down completely randomly.

Pair Corralation between DAX Index and PKSHA TECHNOLOGY

Assuming the 90 days trading horizon DAX Index is expected to generate 0.32 times more return on investment than PKSHA TECHNOLOGY. However, DAX Index is 3.14 times less risky than PKSHA TECHNOLOGY. It trades about 0.17 of its potential returns per unit of risk. PKSHA TECHNOLOGY INC is currently generating about -0.08 per unit of risk. If you would invest  1,990,914  in DAX Index on December 30, 2024 and sell it today you would earn a total of  255,238  from holding DAX Index or generate 12.82% return on investment over 90 days.

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

DAX Index  vs.  PKSHA TECHNOLOGY INC

Pair Trading with DAX Index and PKSHA TECHNOLOGY

The main advantage of trading using opposite DAX Index and PKSHA TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index 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 DAX Index 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.