Correlation Between PCC Rokita and Ferro SA

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

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

Diversification Opportunities for PCC Rokita and Ferro SA

0.24

Correlation Coefficient

PCC Rokita  Ferro SA

Modest diversification

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

Pair Corralation between PCC Rokita and Ferro SA

Assuming the 90 days trading horizon PCC Rokita SA is expected to generate 1.34 times more return on investment than Ferro SA. However, PCC Rokita is 1.34 times more volatile than Ferro SA. It trades about 0.09 of its potential returns per unit of risk. Ferro SA is currently generating about 0.0 per unit of risk. If you would invest  6,900  in PCC Rokita SA on December 29, 2024 and sell it today you would earn a total of  470.00  from holding PCC Rokita SA or generate 6.81% return on investment over 90 days.

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

PCC Rokita SA  vs.  Ferro SA

PCC Rokita SA

Risk-Adjusted Performance

OK

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

Ferro SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ferro SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Ferro SA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with PCC Rokita and Ferro SA

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

The idea behind PCC Rokita SA and Ferro 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.