Correlation Between Netcapital and PJT Partners

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

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

Diversification Opportunities for Netcapital and PJT Partners

0.77

Correlation Coefficient

Netcapital  PJT Partners

Poor diversification

The 3 months correlation between Netcapital and PJT is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Netcapital and PJT Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJT Partners and Netcapital 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 Netcapital are associated (or correlated) with PJT Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJT Partners has no effect on the direction of Netcapital i.e., Netcapital and PJT Partners go up and down completely randomly.

Pair Corralation between Netcapital and PJT Partners

Given the investment horizon of 90 days Netcapital is expected to under-perform the PJT Partners. In addition to that, Netcapital is 1.88 times more volatile than PJT Partners. It trades about -0.07 of its total potential returns per unit of risk. PJT Partners is currently generating about -0.08 per unit of volatility. If you would invest  15,686  in PJT Partners on December 29, 2024 and sell it today you would lose (1,694) from holding PJT Partners or give up 10.8% of portfolio value over 90 days.

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

Netcapital  vs.  PJT Partners

Netcapital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Netcapital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PJT Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days PJT Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's forward-looking indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Netcapital and PJT Partners

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

The idea behind Netcapital and PJT Partners 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.