Correlation Between Padtec Holding and Motorola Solutions

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

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

Diversification Opportunities for Padtec Holding and Motorola Solutions

0.08

Correlation Coefficient

Padtec Holding  Motorola Solutions

Significant diversification

The 3 months correlation between Padtec and Motorola is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Padtec Holding SA and Motorola Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motorola Solutions and Padtec Holding 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 Padtec Holding SA are associated (or correlated) with Motorola Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motorola Solutions has no effect on the direction of Padtec Holding i.e., Padtec Holding and Motorola Solutions go up and down completely randomly.

Pair Corralation between Padtec Holding and Motorola Solutions

Assuming the 90 days trading horizon Padtec Holding SA is expected to under-perform the Motorola Solutions. In addition to that, Padtec Holding is 1.41 times more volatile than Motorola Solutions. It trades about -0.14 of its total potential returns per unit of risk. Motorola Solutions is currently generating about -0.18 per unit of volatility. If you would invest  68,858  in Motorola Solutions on December 2, 2024 and sell it today you would lose (5,169) from holding Motorola Solutions or give up 7.51% of portfolio value over 90 days.

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

Padtec Holding SA  vs.  Motorola Solutions

Padtec Holding SA

Risk-Adjusted Performance

Very Weak

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

Motorola Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Motorola Solutions 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 basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Padtec Holding and Motorola Solutions

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

The idea behind Padtec Holding SA and Motorola Solutions 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.