Correlation Between Performance Technologies and Thrace Plastics

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

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

Diversification Opportunities for Performance Technologies and Thrace Plastics

0.58

Correlation Coefficient

Performance Technologies  Thrace Plastics

Very weak diversification

The 3 months correlation between Performance and Thrace is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Performance Technologies SA and Thrace Plastics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrace Plastics Holding and Performance Technologies 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 Performance Technologies SA are associated (or correlated) with Thrace Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrace Plastics Holding has no effect on the direction of Performance Technologies i.e., Performance Technologies and Thrace Plastics go up and down completely randomly.

Pair Corralation between Performance Technologies and Thrace Plastics

Assuming the 90 days trading horizon Performance Technologies SA is expected to under-perform the Thrace Plastics. But the stock apears to be less risky and, when comparing its historical volatility, Performance Technologies SA is 1.07 times less risky than Thrace Plastics. The stock trades about -0.03 of its potential returns per unit of risk. The Thrace Plastics Holding is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  394.00  in Thrace Plastics Holding on December 4, 2024 and sell it today you would lose (7.00) from holding Thrace Plastics Holding or give up 1.78% of portfolio value over 90 days.

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

Performance Technologies SA  vs.  Thrace Plastics Holding

Performance Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Performance Technologies SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Performance Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Thrace Plastics Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thrace Plastics Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Thrace Plastics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Performance Technologies and Thrace Plastics

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

The idea behind Performance Technologies SA and Thrace Plastics Holding 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.