Correlation Between Perma Fix and Pro Dex

Can any of the company-specific risk be diversified away by investing in both Perma Fix and Pro Dex 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 Perma Fix and Pro Dex into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perma Fix Environmental Svcs and Pro Dex, you can compare the effects of market volatilities on Perma Fix and Pro Dex 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 Perma Fix with a short position of Pro Dex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perma Fix and Pro Dex.

Diversification Opportunities for Perma Fix and Pro Dex

0.67

Correlation Coefficient

Perma Fix  Pro Dex

Poor diversification

The 3 months correlation between Perma and Pro is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Perma Fix Environmental Svcs and Pro Dex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Dex and Perma Fix 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 Perma Fix Environmental Svcs are associated (or correlated) with Pro Dex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Dex has no effect on the direction of Perma Fix i.e., Perma Fix and Pro Dex go up and down completely randomly.

Pair Corralation between Perma Fix and Pro Dex

Given the investment horizon of 90 days Perma Fix Environmental Svcs is expected to under-perform the Pro Dex. But the stock apears to be less risky and, when comparing its historical volatility, Perma Fix Environmental Svcs is 1.95 times less risky than Pro Dex. The stock trades about -0.31 of its potential returns per unit of risk. The Pro Dex is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  5,100  in Pro Dex on November 28, 2024 and sell it today you would lose (1,713) from holding Pro Dex or give up 33.59% of portfolio value over 90 days.

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

Perma Fix Environmental Svcs  vs.  Pro Dex

Perma Fix Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perma Fix Environmental Svcs 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 fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pro Dex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pro Dex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Perma Fix and Pro Dex

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

The idea behind Perma Fix Environmental Svcs and Pro Dex 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.