Correlation Between GSTechnologies and Pfeiffer Vacuum

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

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

Diversification Opportunities for GSTechnologies and Pfeiffer Vacuum

-0.43

Correlation Coefficient

GSTechnologies  Pfeiffer Vacuum

Very good diversification

The 3 months correlation between GSTechnologies and Pfeiffer is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding GSTechnologies and Pfeiffer Vacuum Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfeiffer Vacuum Tech and GSTechnologies 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 GSTechnologies are associated (or correlated) with Pfeiffer Vacuum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfeiffer Vacuum Tech has no effect on the direction of GSTechnologies i.e., GSTechnologies and Pfeiffer Vacuum go up and down completely randomly.

Pair Corralation between GSTechnologies and Pfeiffer Vacuum

Assuming the 90 days trading horizon GSTechnologies is expected to generate 18.98 times more return on investment than Pfeiffer Vacuum. However, GSTechnologies is 18.98 times more volatile than Pfeiffer Vacuum Technology. It trades about 0.01 of its potential returns per unit of risk. Pfeiffer Vacuum Technology is currently generating about 0.08 per unit of risk. If you would invest  220.00  in GSTechnologies on December 27, 2024 and sell it today you would lose (22.00) from holding GSTechnologies or give up 10.0% of portfolio value over 90 days.

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

GSTechnologies  vs.  Pfeiffer Vacuum Technology

GSTechnologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days GSTechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, GSTechnologies is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pfeiffer Vacuum Tech

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pfeiffer Vacuum Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pfeiffer Vacuum is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GSTechnologies and Pfeiffer Vacuum

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

The idea behind GSTechnologies and Pfeiffer Vacuum Technology 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.