Correlation Between Photon Energy and Tatry Mountain

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

By analyzing existing cross correlation between Photon Energy NV and Tatry Mountain Resorts, you can compare the effects of market volatilities on Photon Energy and Tatry Mountain 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 Photon Energy with a short position of Tatry Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Photon Energy and Tatry Mountain.

Diversification Opportunities for Photon Energy and Tatry Mountain

0.45

Correlation Coefficient

Photon Energy  Tatry Mountain

Very weak diversification

The 3 months correlation between Photon and Tatry is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Photon Energy NV and Tatry Mountain Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tatry Mountain Resorts and Photon Energy 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 Photon Energy NV are associated (or correlated) with Tatry Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tatry Mountain Resorts has no effect on the direction of Photon Energy i.e., Photon Energy and Tatry Mountain go up and down completely randomly.

Pair Corralation between Photon Energy and Tatry Mountain

Assuming the 90 days trading horizon Photon Energy NV is expected to under-perform the Tatry Mountain. But the stock apears to be less risky and, when comparing its historical volatility, Photon Energy NV is 1.84 times less risky than Tatry Mountain. The stock trades about -0.31 of its potential returns per unit of risk. The Tatry Mountain Resorts is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  52,500  in Tatry Mountain Resorts on November 19, 2024 and sell it today you would lose (1,000.00) from holding Tatry Mountain Resorts or give up 1.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Photon Energy NV  vs.  Tatry Mountain Resorts

Photon Energy NV

Risk-Adjusted Performance

Very Weak

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

Tatry Mountain Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tatry Mountain Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Tatry Mountain 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 Photon Energy and Tatry Mountain

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

The idea behind Photon Energy NV and Tatry Mountain Resorts 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.