Correlation Between President Bakery and Pylon Public

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

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

Diversification Opportunities for President Bakery and Pylon Public

-0.24

Correlation Coefficient

President Bakery  Pylon Public

Very good diversification

The 3 months correlation between President and Pylon is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding President Bakery Public and Pylon Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pylon Public and President Bakery 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 President Bakery Public are associated (or correlated) with Pylon Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pylon Public has no effect on the direction of President Bakery i.e., President Bakery and Pylon Public go up and down completely randomly.

Pair Corralation between President Bakery and Pylon Public

Assuming the 90 days horizon President Bakery Public is expected to generate 0.67 times more return on investment than Pylon Public. However, President Bakery Public is 1.49 times less risky than Pylon Public. It trades about 0.0 of its potential returns per unit of risk. Pylon Public is currently generating about -0.25 per unit of risk. If you would invest  5,850  in President Bakery Public on October 12, 2024 and sell it today you would earn a total of  0.00  from holding President Bakery Public or generate 0.0% return on investment over 90 days.

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

President Bakery Public  vs.  Pylon Public

President Bakery Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days President Bakery Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, President Bakery is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pylon Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pylon Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with President Bakery and Pylon Public

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

The idea behind President Bakery Public and Pylon Public 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.