Correlation Between Parx Plastics and High Co

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

By analyzing existing cross correlation between Parx Plastics NV and High Co SA, you can compare the effects of market volatilities on Parx Plastics and High Co 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 Parx Plastics with a short position of High Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parx Plastics and High Co.

Diversification Opportunities for Parx Plastics and High Co

-0.23

Correlation Coefficient

Parx Plastics  High Co

Very good diversification

The 3 months correlation between Parx and High is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Parx Plastics NV and High Co SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Co SA and Parx Plastics 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 Parx Plastics NV are associated (or correlated) with High Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Co SA has no effect on the direction of Parx Plastics i.e., Parx Plastics and High Co go up and down completely randomly.

Pair Corralation between Parx Plastics and High Co

Assuming the 90 days trading horizon Parx Plastics NV is expected to under-perform the High Co. But the stock apears to be less risky and, when comparing its historical volatility, Parx Plastics NV is 2.28 times less risky than High Co. The stock trades about -0.24 of its potential returns per unit of risk. The High Co SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  247.00  in High Co SA on October 8, 2024 and sell it today you would lose (1.00) from holding High Co SA or give up 0.4% of portfolio value over 90 days.

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

Parx Plastics NV  vs.  High Co SA

Parx Plastics NV

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Parx Plastics NV are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Parx Plastics reported solid returns over the last few months and may actually be approaching a breakup point.

High Co SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days High Co SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, High Co is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Parx Plastics and High Co

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

The idea behind Parx Plastics NV and High Co SA 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.