Correlation Between Payton Planar and Payton L

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

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

Diversification Opportunities for Payton Planar and Payton L

-0.4

Correlation Coefficient

Payton Planar  Payton L

Very good diversification

The 3 months correlation between Payton and Payton is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Payton Planar Magnetics and Payton L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payton L and Payton Planar 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 Payton Planar Magnetics are associated (or correlated) with Payton L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payton L has no effect on the direction of Payton Planar i.e., Payton Planar and Payton L go up and down completely randomly.

Pair Corralation between Payton Planar and Payton L

Assuming the 90 days trading horizon Payton Planar Magnetics is expected to generate 0.81 times more return on investment than Payton L. However, Payton Planar Magnetics is 1.23 times less risky than Payton L. It trades about 0.09 of its potential returns per unit of risk. Payton L is currently generating about 0.0 per unit of risk. If you would invest  725.00  in Payton Planar Magnetics on December 27, 2024 and sell it today you would earn a total of  60.00  from holding Payton Planar Magnetics or generate 8.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	79.69%
Values	Daily Returns

Payton Planar Magnetics  vs.  Payton L

Payton Planar Magnetics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Payton Planar Magnetics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Payton Planar may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Payton L

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Payton Planar and Payton L

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

The idea behind Payton Planar Magnetics and Payton L 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..