Correlation Between Mindflair Plc and Pressure Technologies

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

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

Diversification Opportunities for Mindflair Plc and Pressure Technologies

-0.49

Correlation Coefficient

Mindflair Plc  Pressure Technologies

Very good diversification

The 3 months correlation between Mindflair and Pressure is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Mindflair Plc and Pressure Technologies Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pressure Technologies Plc and Mindflair Plc 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 Mindflair Plc are associated (or correlated) with Pressure Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pressure Technologies Plc has no effect on the direction of Mindflair Plc i.e., Mindflair Plc and Pressure Technologies go up and down completely randomly.

Pair Corralation between Mindflair Plc and Pressure Technologies

Assuming the 90 days trading horizon Mindflair Plc is expected to generate 14.01 times more return on investment than Pressure Technologies. However, Mindflair Plc is 14.01 times more volatile than Pressure Technologies Plc. It trades about 0.18 of its potential returns per unit of risk. Pressure Technologies Plc is currently generating about -0.08 per unit of risk. If you would invest  68.00  in Mindflair Plc on October 23, 2024 and sell it today you would earn a total of  37.00  from holding Mindflair Plc or generate 54.41% return on investment over 90 days.

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

Mindflair Plc  vs.  Pressure Technologies Plc

Mindflair Plc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mindflair Plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Mindflair Plc unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pressure Technologies Plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pressure Technologies Plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Pressure Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mindflair Plc and Pressure Technologies

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

The idea behind Mindflair Plc and Pressure Technologies Plc 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.