Correlation Between MKDWELL Tech and Power Solutions

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

By analyzing existing cross correlation between MKDWELL Tech Warrants and Power Solutions International,, you can compare the effects of market volatilities on MKDWELL Tech and Power Solutions 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 MKDWELL Tech with a short position of Power Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of MKDWELL Tech and Power Solutions.

Diversification Opportunities for MKDWELL Tech and Power Solutions

0.58

Correlation Coefficient

MKDWELL Tech  Power Solutions

Very weak diversification

The 3 months correlation between MKDWELL and Power is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding MKDWELL Tech Warrants and Power Solutions International, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Solutions Inte and MKDWELL Tech 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 MKDWELL Tech Warrants are associated (or correlated) with Power Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Solutions Inte has no effect on the direction of MKDWELL Tech i.e., MKDWELL Tech and Power Solutions go up and down completely randomly.

Pair Corralation between MKDWELL Tech and Power Solutions

Assuming the 90 days horizon MKDWELL Tech Warrants is expected to under-perform the Power Solutions. In addition to that, MKDWELL Tech is 2.21 times more volatile than Power Solutions International,. It trades about -0.08 of its total potential returns per unit of risk. Power Solutions International, is currently generating about 0.07 per unit of volatility. If you would invest  2,589  in Power Solutions International, on December 21, 2024 and sell it today you would earn a total of  373.00  from holding Power Solutions International, or generate 14.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	66.67%
Values	Daily Returns

MKDWELL Tech Warrants  vs.  Power Solutions International,

MKDWELL Tech Warrants

Risk-Adjusted Performance

Very Weak

Over the last 90 days MKDWELL Tech Warrants 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 fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Power Solutions Inte

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Power Solutions International, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, Power Solutions showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MKDWELL Tech and Power Solutions

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

The idea behind MKDWELL Tech Warrants and Power Solutions International, 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.